Suppose that an investment promises to provide the following cash flows:
|
Year |
End of Year Cash Flow |
|
Year 1 |
$0 |
|
Year 2 |
$1,000 |
|
Year 3 |
$0 |
|
Year 4 |
–$1,000 |
If interest is compounded annually at 5%, what is the value of the investment at the end of: a. Year 1? b. Year 0?