Are the following cash flow diagrams economically equivalent if the interest rate is 7% per year?07M18M6MIn23ΕΟΥ5M07M7M7MTIT123ΕΟΥThe left-hand diagram's discounted value at the EOY 0 is $ M. (Round to three decimal places.)7M4

The rate of interest i =7% To compare these two cash flows, use present worth analysis. These two…

Are the following cash flow diagrams economically equivalent if the interest rate is 7% per year? Q 0 7M 1 8M 2 EOY 6M 3 5M ... 7M 1 7M 2 ΕΟΥ The left-hand diagram's discounted value at the EOY 0 is $M. (Round to three decimal places.) 7M 3

Are the following cash flow diagrams economically equivalent if the interest rate is 7% per year? Q 0 7M 1 8M 2 EOY 6M 3 5M ... 7M 1 7M 2 ΕΟΥ The left-hand diagram's discounted value at the EOY 0 is $M. (Round to three decimal places.) 7M 3

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Are the following cash flow diagrams economically equivalent if the interest rate is 7% per year?
0
7M
1
8M
6M
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2
3
ΕΟΥ
5M
0
7M
7M
7M
TIT
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The left-hand diagram's discounted value at the EOY 0 is $ M. (Round to three decimal places.)
7M
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Step 1: Determine the given information:

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Step 2: Determine the discounted value of left hand diagram:

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Step 3: Determine the present value of right hand cash flow diagram:

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