Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Compute the annual-equivalence amount for the following cash flow series at
i = 10%:
Transcribed Image Text:$1,600
$1,600
$800
$800
$800
2
3
5
$500
$500
$1,000
Expert Solution
Step 1
Answer:
Given values:
Note: Net cash flow = Inflow of cash – Outflow of cash
(Outflow is represented by downward arrow and inflow is represented by an upward arrow)
Step 2
To calculate: Equivalence Annual Amount.
Formulas to be used:
= $2540.11n
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