Give the detailed solution and draw the cash flow. I will rate accordingly 6.14 For what value of X are the following two cash flows equivalent at a 10% interest rate?End of Year134Flow A, $-10 0005000500050005000Flow B. $3500450055006500EquatingPA=-$10 000 + $5000(P/A, 10%, 4)Pa = X + [S3500 + $1000(A/G, 10%, 4)] (PIA, 10%, 4)andwe obtainX =-$10 000+ [$1500-$1000(A/G, 10%, 4)] (PIA, 10%, 4)= -$10 000 + [$1500- $1000(1.3812)] (0.31547)= -$9623

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Economics

Give the detailed solution

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

Give the detailed solution and draw the cash flow. I will rate accordingly

6.14 For what value of X are the following two cash flows equivalent at a 10% interest rate?
End of Year
1
3
4
Flow A, $
-10 000
5000
5000
5000
5000
Flow B. $
3500
4500
5500
6500
Equating
PA=-$10 000 + $5000(P/A, 10%, 4)
Pa = X + [S3500 + $1000(A/G, 10%, 4)] (PIA, 10%, 4)
and
we obtain
X =-$10 000+ [$1500-$1000(A/G, 10%, 4)] (PIA, 10%, 4)
= -$10 000 + [$1500- $1000(1.3812)] (0.31547)
= -$9623

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