What is the annual equivalent amount at i = 10% for the payment series with the...

What is the annual equivalent amount at i = 10% for the payment series with the first payment in the amount of $2000 in year 2 and the second payment in year 4 at $4000 and the third payment of $6000 in year 6?

Expert Solution

Present Worth = 2000(P/F, 10%, 2) + 4000(P/F, 10%, 4) + 6000(P/F, 10%, 6)

= 2000(0.8264) + 4000(0.6830) + 6000(0.5645)

= 1652.8 + 2732 +3387

= 7771.8

Annual equivalent amount = 7771.8(A/P, 10%, 6)

= $1,784.40

Thus, the annual equivalent amount is $1,784.40.

Rahul Sunny answered 2 years ago

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