Consider a series of end-of-period CFs spanning 2042-2059, which increase by a fixed amount each period....

Consider a series of end-of-period CFs spanning 2042-2059, which increase by a fixed amount each period. The amount of the first CF in the series is $126 and the increment is $53. The interest rate is 3.0%. What is the equivalent value of this series at the beginning of 2042?

Solutions

Expert Solution

PV = 7351.67

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Year	Cash flow	PV factor @3%	PV of cash flow
2042	126	0.970873786	122.3300971
2043	179	0.942595909	168.7246677
2044	232	0.915141659	212.312865
2045	285	0.888487048	253.2188087
2046	338	0.862608784	291.5617691
2047	391	0.837484257	327.4563444
2048	444	0.813091511	361.012631
2049	497	0.789409234	392.3363895
2050	550	0.766416732	421.5292028
2051	603	0.744093915	448.6886307
2052	656	0.722421277	473.9083574
2053	709	0.70137988	497.2783351
2054	762	0.68095134	518.8849211
2055	815	0.661117806	538.8110117
2056	868	0.641861947	557.1361703
2057	921	0.623166939	573.936751
2058	974	0.605016446	589.2860183
2059	1027	0.587394608	603.254262
		Total	7351.667233

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Hope this answer your query.

Feel free to comment if you need further assistance. J

jeff jeffy answered 8 months ago

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