Consider a series of end-of-period CFs spanning 2041-2055, which increase by a fixed amount each period....

Consider a series of end-of-period CFs spanning 2041-2055, which increase by a fixed amount each period. The amount of the first CF in the series is $148 and the increment is $56. The interest rate is 0.5%. What is the equivalent uniform amount for a series of end-of-year CFs spanning the same time period?

Expert Solution

	0.5000%
Cash flows	Year	Discounted CF
-	0	0.00
148.00	1	147.26
204.00	2	201.98
260.00	3	256.14
316.00	4	309.76
372.00	5	362.84
428.00	6	415.38
484.00	7	467.39
540.00	8	518.88
596.00	9	569.84
652.00	10	620.28
708.00	11	670.20
764.00	12	719.62
820.00	13	768.520
876.00	14	816.919
932.00	15	864.819

Value of cash flow at the beginning of 2041 = 7,709.82 (we have assumed first cash flow at the end of 2041)

PV = 7,709.82

FV = 0

rate = 0.5%

N = 15

use PMT function in Excel

equivalent uniform amount = 534.79

jeff jeffy answered 1 year ago

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