Value of a mixed stream. Neil Tyson has developed a prototype of an armored fabric  that is very light, but is capable of stopping projectiles as efficiently as a tradi-tional  bullet-proof jacket. A military supplier is considering the technology and has offered to  pay Neil £30,000 in years 1, 2, and 3; and £40,000 in years 4 to 6. All payments will be  made at the end of each year.    Lay out the cash flows involved in the offer on a timeline.   If Neil applies a required rate of return of 10% to them, what is the present value of  this series of payments?  Another company has made an offer of a one-time payment of £275,000 for the  fabric. Which offer should Neil accept

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Cash Flow in Engineering Economics (Interest and Equivalence)

The cash flows of a firm are of two categories such as cash inflows and cash outflows. Cash inflow is the money or income entering a firm during a specific period whereas cash outflow is the money exiting a firm during a specific period in the form of the expenses incurred by the firm. In other words, we can say that cash flow is a series of expenses and credits that run over the project over the lifetime it existed whereas cash inflows are all the income and gains the company earns as a result of its operations.