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PROBLEM: what is the present equivalent value of BP's proposed payment schedule? GIVEN: F₁ = $3 billion, F₂ = $2 billion, i = 3% pre quarter F3 to F₁4 = $1.25 billion, N = 14 quarters SOLUTION: (c) Figure below shows the cash-flow diagram for this situation. P= ? 0 2 3 $2 billion $3 billion 4 5 End of Quarter 6 7 8 9 10 $1.25 billion 11 12 13

PROBLEM: what is the present equivalent value of BP's proposed payment schedule? GIVEN: F₁ = $3 billion, F₂ = $2 billion, i = 3% pre quarter F3 to F₁4 = $1.25 billion, N = 14 quarters SOLUTION: (c) Figure below shows the cash-flow diagram for this situation. P= ? 0 2 3 $2 billion $3 billion 4 5 End of Quarter 6 7 8 9 10 $1.25 billion 11 12 13

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
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PROBLEM: what is the present equivalent value of BP's proposed payment schedule? GIVEN: F₁ = $3 billion, F₂ = $2 billion, i = 3% pre quarter F3 to F14 $1.25 billion, = N = 14 quarters SOLUTION: (c) Figure below shows the cash-flow diagram for this situation. P=? 0 2 3 $2 billion $3 billion 4 5 End of Quarter 6 7 8 9 $1.25 billion 10 11 12 13 14
Transcribed Image Text:PROBLEM: what is the present equivalent value of BP's proposed payment schedule? GIVEN: F₁ = $3 billion, F₂ = $2 billion, i = 3% pre quarter F3 to F14 $1.25 billion, = N = 14 quarters SOLUTION: (c) Figure below shows the cash-flow diagram for this situation. P=? 0 2 3 $2 billion $3 billion 4 5 End of Quarter 6 7 8 9 $1.25 billion 10 11 12 13 14
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