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Two receipts of $1,000 each are desired at the EOYS 10 and 11. To make these- receipts possible, four EOY annuity amounts will be deposited in a bank at EOYS 2,3,4, and 5. The bank's interest rate (i) is 12% per year. (a) Draw a cash-flow diagram for this situation.

Two receipts of $1,000 each are desired at the EOYS 10 and 11. To make these- receipts possible, four EOY annuity amounts will be deposited in a bank at EOYS 2,3,4, and 5. The bank's interest rate (i) is 12% per year. (a) Draw a cash-flow diagram for this situation.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Two receipts of $1,000 each are desired at the EOYS 10 and 11. To make these receipts possible, four EOY annuity amounts will be deposited in a bank at EOYS 2,3,4, and 5. The bank's interest rate (i) is 12% per year. (a) Draw a cash-flow diagram for this situation. (b) Determine the value of A that establishes equivalence in your cash-flow diagram. (c) Determine the lump-sum value at the end of year 11 of the completed cash- flow diagram based on your answers to Parts (a) and (b).
Transcribed Image Text:Two receipts of $1,000 each are desired at the EOYS 10 and 11. To make these receipts possible, four EOY annuity amounts will be deposited in a bank at EOYS 2,3,4, and 5. The bank's interest rate (i) is 12% per year. (a) Draw a cash-flow diagram for this situation. (b) Determine the value of A that establishes equivalence in your cash-flow diagram. (c) Determine the lump-sum value at the end of year 11 of the completed cash- flow diagram based on your answers to Parts (a) and (b).
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