Question
In: Finance
Consider the following cash flows and interest rates: End of Year Interest Rate During Period Cash...
Consider the following cash flows and interest rates:
End of Year Interest Rate During Period
Cash Flow at End of Period
0 $0
1 10% $2,000
2 8% −$3,000
3 12% $4,000
A. Determine the future worth of this series of cash flows.
B. Determine the present worth of this series of cash flows.
C. Determine a 3-year uniform annual series that is equivalent to
the original series.
Solutions
Expert Solution
1.
=2000*1.08*1.12+3000*1.12+4000=9779.20
2.
=4000/(1.12*1.08*1.1)+3000/(1.08*1.1)+2000/1.1=7349.68734968735
3.
=(4000/(1.12*1.08*1.1)+3000/(1.08*1.1)+2000/1.1)/(1/(1.12*1.08*1.1)+1/(1.08*1.1)+1/1.1)=2937.04949543489
jeff jeffy answered 2 years agoRelated Solutions
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2....
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Multiple Choice 3.12 years 2.82 years 2.77 years 2.84 years 2.96
years
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