Question

Will rate!!

For the cash flow diagram below, which of the following equation with functional notation will solve for the unknown 9,000 8600 0 1 4 4500 10% 6000 e Z--6000FP 10%, 1) . 4500F/P 10%, 2+ 86000F/P 10%, 3) + 9000F/P 10%, 4) o z"-ooo . 450OPF. 10%, 1) + 86OOPE 10%, 31+9000P/E 10%, 4) Ο Z-, 600OPF, 10%, 4) . 450ORE 10%, 1+ 86000p/F 10%, 2) 900ORE 10%, 4) e z-, 6000P/F 10%, 1) . 4500(RE 10%, 2) + BóOOOP/F ION 3) + 9000P/E 10%, 4) OZ-6000-4500 8600+9000

Answer 1

Downward arrows indicates outflow. So, these values will be taken with negative sign.

Upward arrows indicates inflow. So, these values will be taken with positive sign.

Value of Z has to be calculated at year 0. This implies that present value of the amount has to be calculated.

The value of Z can be solved in the following manner -

Z = -6,000 - 4,500(P/F, 10%, 1) + 8,600(P/F, 10%, 3) + 9,000(P/F, 10%, 4)

Hence, the correct answer is the option (2).