In: Finance
Determine the interest rate (i) that makes the pairs of cash flows below economically equivalent.
Year |
Pair 1 |
Pair 2 |
0 |
$0 |
0 |
1 |
$2000 |
$2500 |
2 |
$2000 |
$1875 |
3 |
$2000 |
$1406 |
4 |
$2000 |
$1055 |
5 |
$2000 |
$791 |
6 |
$2000 |
$595 |
as we press the enter buttong the changed screen is as below
the value in cell d293 tuns zero and the disount factor turns 23.96%.so the answer is 23.96%. please ask if any query.
the goal function is in tab data and goal seek.