**Problem 7: Cash Flow Equivalence Analysis**It is stated that the following cash flows are equivalent at an annual 10% interest rate. Determine the W value for the second cash flow series.**Diagram Explanation:**- The first cash flow series is represented as a series of arrows stretching vertically upwards, each labeled with $500. The arrows are positioned from time period 0 to 6, indicating that $500 is paid at each period over 7 periods (from 0 to 6).- The second cash flow series also has arrows extending vertically upwards and labeled with "W" at time periods 1 through 5. This implies that an unknown amount "W" is paid in each of these periods.Your task is to determine the value of "W" that makes these two cash flow series equivalent under the condition of a 10% annual interest rate.

Here we calculate the value of W by using the both cashflow , so the calculation of the following by…

Answered: 7. It is said that the following cash…

7. It is said that the following cash flows are equivalent at an annual 10% interest rate. Determine the W value for the second cash flow series. w $500 0 1 2 3 4 5 6 0 1 2 3 4 5 6

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: To accumulate a fund of P 80,000 at the end of 10 years, a man will make equal annual deposits in…

A: Given: The future value is = P80,000 Time period = 10 years The interest rate is = 5% compounded…

Q: 8. If Ramil invested P20,000.00 at a nominal rate of interest of 14% compounded quarterly. What is…

A: Given that, Ramil invested 20,000.00 Nominal interest rate = 14% or 0.14

Q: Please solve all three problem I will give you thumbs up. Problem 1 Mrs. Doe deposits $100…

A: Note: You have uploaded multiple questions at a time. Hence, we shall solve only first one for you.…

Q: If the effective annual interest rate is 4%, compute the equivalent nominal annual interest…

A: Present value is the value of investment in today's dollar Future value is the value of investment…

Q: 3. Don Blaza bought a property for 300,000 down payment and the balance in 10 deferred semi-annual…

A: Here we calculate the given by following method as follow;

Q: A man paid 10% down payment of P200,000 for a house and lot and agreed to pay the 90% balance on…

Q: 14. Audrey buys a piece of lot for P160,000 down payment and 12 deferred semi-annual payments of…

A: The entrance and outflow of cash and cash equivalents are referred to as cash flow. The cash flow of…

Q: For an interest rate of 10% compounded annually, evaluate the value of "X" from the cash flows given…

A: Compound interest is often referred to as "interest on interest." It's the concept of earning…

Q: 7. How much is invested at the beginning of each year to accumulate a fund of P20,000.00 at 4%…

A: We are going to use Future worth to answer this question.

Q: Payments of Php Find the present value of the annuity due at the specified interest rate: 250 will…

A: The present value (PV) of a series measures the current value of the cash flows in the future

Q: A man deposits P 1,000 at the end of each month for 3 years at a nominal rate of 12% compounded…

A: Given, Nominal rate of interest (r) = 12% compounded monthly For finding the effective interest…

Q: 3.Suppose that a $100 lump sum amount is invested for 10 years at a nominal interest rate of 6%…

A: Investment is $100. Since the interest rate is compounded quarterly the interest rate per quarter…

Q: An automobile loan of $15,000 at a nominal rate of 9% compounded monthly for 36 months requires…

A: An auto mobile loan of $15,000 at a nominal rate of 9% compounded monthly for 36 months requires…

Q: By the condition of a will, the sum of P 400,000 was left to a Aldrin to be held in trust fund by…

A: The amount paid in excess of the principal amount by the borrower to the lender is the interest…

Q: 14. Compute for the effective annual interest rate if nominal rate is 7% compounded continuously.…

A: Given that, Nominal interest rate (i) = 7% or 0.07 compounded continuously.

Q: If you borrow 9000 dolars and agree to repay the loan in six equal annual payments at an interest…

A: In economics, present value refers to the current value of a future stream of cash flow. Future…

Q: 3. Suppose that the parents of a young child decide to make annual deposits into a savings account,…

A: Annuity is defined as the series of annual payment that are paid or received at beginning or at the…

Q: 18.b

Q: 65. A 10% effective rate of interest is equivalent to what percent if compounded continuously? 9.53%…

A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…

Q: You have deposited your $20000 lottery winnings in an account that pays 8%interest compounded…

Q: What is the present equivalent of a uniform series of quarterly payments of $4,500 each for 4 years…

A: Because compounded bimonthly; thus we will compute to compound six times annually. Effective…

Q: If marry put $100,000 into an account that pays 4.5% annual interest, and she plan to withdraw…

A: here we calculate the time when account of Marry will empty by calculating the future value so the…

Q: The value of annual(A) uniform payments over years 1-5 is equivalent to a payment schedule of 200,…

A: The time value of money refers to the concept that money you have now is worth more than the same…

Q: What is the present equivalent of a uniform series of quarterly payments of $4,500 each for 6 years…

A: Given: Interest rate = 8% compounded bimonthly Quarterly payments @ $4,500 each quarter for 6 years…

Q: On the day his son was born, a father deposited to a trust company a sufficient amount of money so…

A: A lender charges a borrower an interest rate that is a percentage of the principal (the amount…

Q: Compute the present value for the cash flow diagram shown below if i-6%, compounded annually.…

A: Given: Interest rate=6% compounded annually To find: Present value

Q: How much money would you have to deposit for 5 consecutive years starting one year from now if you…

A: Present Value of an Annuity Investing in a future income stream, such as an annuity, gives you the…

Q: b) 0 1 2 25 50 75 1 2 60 75 Year Cash Flow/$ Year 0 Cash Flow/$ 35 3 4 100 125 3 110 135 5 150 5 160

A: The Future Value Interest Factor will be considering the interest rate, time period, and compounding…

Q: 2. Find the equivalent present worth of the cash receipts in the accompanying diagram, where i = 8%…

Q: Consider the following three cash flow series: End of Year Cash Flow Series A Cash Flow Series B…

A: Cash flow is the movement of money in and out of a company. Cash received signifies inflows, and…

Q: 3. An amortization of a debt is in a form of a gradient series of P5,000 on the first years, P4,500…

A: Present value states that an amount of money today is worth more than the same amount in the future.…

Q: What is the present equivalent of a uniform series of quarterly payments of $4,500 each for 8 years…

A: This cash flow contains two uniform series, one is $4500 paid quarterly for the first 8 years and…

Q: What is the difference between the present worth of annuity due and ordinary annuity having the…

A: In ordinary annuity payments (regular) are done at the end of each interval. On the other hand, in…

Q: You invested $10,000 at 12% interest rate compounded monthly, what is your accumulated amount at the…

A: Present value, P= 10000 n= number of times in a year it is compounded = 12 months t= number of years…

Q: Waa deposits $ 1250 per month in to an account that pays 6.2% interest annually. Calculate the money…

A: Future value (FV) determines the value of a present investment at a future date based on an assumed…

Q: If $11,500 per quarter is invested in an account that earns a nominal annual interest rate of 9%…

A: Compounding refers to the process of generating interest on an investment over a usual period of…

Q: Suppose $5,000 is invested at an annual interest rate of 7%. Compute the balance after 10 years if…

A: (Q)Suppose $5,000 is invested at an annual interest rate of 7%. Compute the balance after10 years if…

Q: A) $37,365 B) $37,205 C) $37,890 D) $36,36511. 11. A machine has a first cost of $150,000. Its…

A: The information being given is as follows:- First cost = $150,000 Service life = 10 years Annual…

Q: 29. If money is worth 5% compounded semi-annually, find the, present value of a sequence of 12…

Q: What is the current value of a P 200.00 annuity be made at the beginning of each year, for 3 years…

A: Since the Annuity is made at the beginning of each year, so the formula for present value is: PV= z…

Question

**Problem 7: Cash Flow Equivalence Analysis**

It is stated that the following cash flows are equivalent at an annual 10% interest rate. Determine the W value for the second cash flow series.

**Diagram Explanation:**

- The first cash flow series is represented as a series of arrows stretching vertically upwards, each labeled with $500. The arrows are positioned from time period 0 to 6, indicating that $500 is paid at each period over 7 periods (from 0 to 6).

- The second cash flow series also has arrows extending vertically upwards and labeled with "W" at time periods 1 through 5. This implies that an unknown amount "W" is paid in each of these periods.

Your task is to determine the value of "W" that makes these two cash flow series equivalent under the condition of a 10% annual interest rate.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

2-Given a nominal rate of a 30%, what is the effective annual interest rate if the interest is compounded monthly? Find effective P if F=$10,000 over 5 years.
Need typed solution..vll upvote
Don
2. Find the quarterly payment for 21 quarters to discharge an obligation of P120,000 if money is worth 4% compounded 2 quarterly and the first payment is due at the end of 3 years and 9 months.
The two cash flows A and B shown below diagram are said to be equivalent at 8% interest compounded annually. Find the unknown value of C that satisfies the equivalence. 1000 1500 2000 2500 3000 0 1 2 3 4 0 1 2 3 4 A のこ 500 B
Q 10 please
Show complete solution and formula used. Please calculate it manually and write it in a paper. Provide cash flow diagram.
A total of $54,000 is borrowed and repaid with 48 monthly payments, with the first payment occurring one month after receipt of the $54,000. The stated interest rate is 8.50% compounded quarterly. What monthly payment is required? Please answer correct calculation asap plz Don't answer by pen paper plz
Need complete solution and fast!!
2. Find the amount at the end two years znd seven months of P 1M if invested at 9& compounded quarterly and using simple interest for anytime less than a year interest period.
2. A loan earns an interest of 12% compounded- quarterly and should be paid within 6 yrs. How much is the loan if the mode of payment is made this way: *focal point at 6, and draw a cash flow diagram CFD P 0 $ 20,000 2 3 F = P(1+i)n P=F(1+i)¯" $ 30,000 4 $ 15,000 5 i=12% compounded quarterly 6 $40,000 REMEMBER THIS!