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a. If the value of Q is $2,750 at what interest rate will the net cash flow be balanced and equivalent? (Hint: at what interest rate per year NPW is equal to zero) b. If the interest rate is 6% per year compounded yearly, for what value of Q will the cash flow have equivalence? (Hint: for what value of Q, NPW is equal to zero)

a. If the value of Q is $2,750 at what interest rate will the net cash flow be balanced and equivalent? (Hint: at what interest rate per year NPW is equal to zero) b. If the interest rate is 6% per year compounded yearly, for what value of Q will the cash flow have equivalence? (Hint: for what value of Q, NPW is equal to zero)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The cash flow for a company for their investment account is shown in the table below: Cash Year Cash Inflow Outflow $50,000 ($2,000) 1 ($5,100) 3Q ($4,500) $1,600 (36Q) 4 $0 $0 12Q ($8,500) 20Q ($4,500) 7 $7,500 ($6,500) 8 $0 (16Q) a. If the value of Q is $2,750 at what interest rate will the net cash flow be balanced and equivalent? (Hint: at what interest rate per year NPW is equal to zero) b. If the interest rate is 6% per year compounded yearly, for what value of Q will| the cash flow have equivalence? (Hint: for what value of Q. NPW is equal to zero)
Transcribed Image Text:The cash flow for a company for their investment account is shown in the table below: Cash Year Cash Inflow Outflow $50,000 ($2,000) 1 ($5,100) 3Q ($4,500) $1,600 (36Q) 4 $0 $0 12Q ($8,500) 20Q ($4,500) 7 $7,500 ($6,500) 8 $0 (16Q) a. If the value of Q is $2,750 at what interest rate will the net cash flow be balanced and equivalent? (Hint: at what interest rate per year NPW is equal to zero) b. If the interest rate is 6% per year compounded yearly, for what value of Q will| the cash flow have equivalence? (Hint: for what value of Q. NPW is equal to zero)
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