Consider the following sequence of year-end cash flows: EOY 1 2 3 4 5 Cash Flow $4,200 ...

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Consider the following sequence of year-end cash flows: EOY 1 2 3 4 5 Cash Flow $4,200 ...

Consider the following sequence of year-end cash flows:

EOY 1 2 3 4 5

Cash Flow $4,200 $5,300 $6,400 $7,500 $8,600

What is the uniform annual equivalent (to the nearest whole dollar) if the interest rate is 12% per year? (Do not enter a dollar sign $ with your answer.)

business economics

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Answer 1

Answer #1

Uniform annual equivalent = A

i = 12% and t = 5 years

A/(1 + 12%) + ... + A/(1 +12%)⁵ = 4200/(1 + 12%) + 5300/(1 + 12%)² + 6400/(1 + 12%)³ + 7500/(1 + 12%)⁴ + 8600/(1 + 12%)⁵

3.604 x A = 22176.78

A = 6152.05

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Answer 2

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