Q Search Consider the two cash flows 100 C 20 0 1 2 3 4 5 0 1 2 3 4 5 ssume the interest rate is 6%. What is the value of C such that the two cash flow are equivalent? Answers: 156.2 166.7 182.4 172.8
Q Search Consider the two cash flows 100 C 20 0 1 2 3 4 5 0 1 2 3 4 5 ssume the interest rate is 6%. What is the value of C such that the two cash flow are equivalent? Answers: 156.2 166.7 182.4 172.8
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
Problem 1PS
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Transcribed Image Text:A 24
Q Search
Consider the two cash flows
100
20
0 1 2 3 4 5
0 1 2 3
4 5
Assume the interest rate is 6%. What is the value of C such that the two cash flow are equivalent?
Answers:
156.2
166.7
182.4
172.8
OPuestion 5 of 25
2020-10.4.
5292
OCT
NPOGX
28
Expert Solution
Step 1
THIS is the question of ANNUITY and PV.
Annuity is the stream of equal cash flow for specified period of time at the defined rate.
PV is the present value of the future cashflows at the defined rate.
Formula for present value of annuity:
where, A = annuity
R = rate
N = no of period
Formula for PV :
where,
FV= future value
R = rate
N = no of period
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