**Present Equivalent Value Calculation for Varying Interest Rates**This educational page explains how to determine the present equivalent value of a cash-flow diagram when the annual interest rate varies as indicated. ### Cash-Flow Diagram OverviewThe diagram displays cash flows over a period of six years. It includes specific cash amounts and their associated interest rates:- Year 1: $1,000 with an interest rate of $ i_1 = 8\% $- Year 2: $1,000 with an interest rate of $ i_2 = 15\% $- Year 3: $2,000 with an interest rate of $ i_3 = 12\% $- Year 4: No cash flow with an interest rate of $ i_4 = 8\% $- Year 5: $1,000 with an interest rate of $ i_5 = 8\% $- Year 6: $2,000 with an interest rate of $ i_6 = 12\% $### Instructions- Click the icon to view the interest and annuity table for discrete compounding for an interest rate of $ i = 8\% $ per year.- Click the icon to view the interest and annuity table for discrete compounding for an interest rate of $ i = 12\% $ per year.### GoalThe goal is to determine the present equivalent value, denoted as P, of this cash-flow diagram by using the interest and annuity tables for the specified interest rates. Be sure to round the result to the nearest cent.**The present equivalent value is \$[ ]**. (Round to the nearest cent.)

Determine the present equivalent value of the cash-flow diagram shown below when the annual interest rate, i varies as indicated. P=? ܕܦܢ ܦܐ ܚܤܐܤܦ 0 $1,000 i₁ = 8% 2 = 15% I3 = 12% 1 $2,000 The present equivalent value is $ 2 $1,000 14 = 8% 3 Years (Round to the nearest cent.) $2,000 15 = 8% 16 = 12% 5 Click the icon to view the interest and annuity table for discrete compounding when i = 8% per year. Click the icon to view the interest and annuity table for discrete compounding when ;= 12% per year. 6 ܘ

Determine the present equivalent value of the cash-flow diagram shown below when the annual interest rate, i varies as indicated. P=? ܕܦܢ ܦܐ ܚܤܐܤܦ 0 $1,000 i₁ = 8% 2 = 15% I3 = 12% 1 $2,000 The present equivalent value is $ 2 $1,000 14 = 8% 3 Years (Round to the nearest cent.) $2,000 15 = 8% 16 = 12% 5 Click the icon to view the interest and annuity table for discrete compounding when i = 8% per year. Click the icon to view the interest and annuity table for discrete compounding when ;= 12% per year. 6 ܘ

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A cash flow at time zero (now) of $7,386 is equivalent to another cash flow that is an EOY annuity of $2,100 over five years (starting at year 1). Each of these two cash-flow series is equivalent to a third series, which is a uniform gradient series. What is the value of G for this third series over the same five-year time interval? Assume that the cash flow at the end of year one is zero. Choose the correct answer below. A. $1,050 B. $702 OC. $949 OD. $1,195 OE. Not enough information given.
K How much money should be deposited annually in a bank account for five years if you wish to withdraw $6,000 each year for three years, beginning five years after the last deposit? The interest rate is 2% per year. Click the icon to view the interest and annuity table for discrete compounding when i=2% per year. The annual deposit amount should equal $ per year. (Round to the nearest dollar.)
Economics If an interest rate is 18% per year, compounded quarterly, what is the effective quarterly interest rate? 3.8% 4.5% 4.8% 6.2% 8.6% Explain me
FIN301 Copyright © 2020 Singapore University of Social Sciences (SUSS) Page 5 of 5Timed Online Assignment – July Semester 2020(a) Suppose Jack can get a 2% interest rate for a 6 month USD deposit, solve for the interest rate for a 6 month SGD deposit so that Jack will be indifferent to exchanging the USD now or in 6 months’ time. (Note: The 2% is not an annual rate but is applicable for the 6-month period.) (b) Suppose Jack decides not to use the forward market to hedge the exchange rate risk but use the futures market instead. Explain one (1) advantage and one (1) disadvantage of using each method.
Suppose the present value of a series of payments is equal to R84 398 and the (constant) nominal interest rate is equal to 9.5 %. If 13 equal annual payments have to be made, what is the size of each payment?
*Any help with this question would be appreciated, thanks!*