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29 September, 08:54

You anticipate a cash flow of $900 at the end of year 1, $500 at the end of year 2, and $400 at the end of year 4. What is the annual equivalent of the cash flow for years 1 through 4?

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  1. 29 September, 09:13
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    annual equivalent of the cash flow for years 1 through 4 = $1629.90

    Explanation:

    cash flow at the end of Year 1 = $900

    cash flow at the end of Year 2 = $500

    cash flow at the end of Year 4 = $400

    annual equivalent of the cash flow for years 1 through 4? at an interest rate of 6% annually

    = 900/1.06 + 500/1.06 x 1.06 + 400/1.06x1.06x1.06

    = $1629.90 is the present value of the different cash flow
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