Question2 1 pts Consider a 47959 CF at the beginning of 2011

Question2 1 pts Consider a $47959 CF at the beginning of 2011, The interest rate is 12.4%, what is the equivalent uniform amount for a series of end-of-year CFs spanning 2011-2023?

Solution

Given $47,959 is the value at the beginning of 2011.

we need to find out the equivalent uniform amount for a series of end of year cash flows from 2011-2023, whose present value is $47,959.

The present value of annuity can be known by the below mentioned formula:

A = P[(1- (1+r)^-n / r]

;here,

A = $47,959

P is to be found out

r = 12.4% =>0.124

n = 13 years....(including 2011)

now<

$47,959 = P [1 -(1+0.124)^(-13)] / 0.124

=>$47,959 = P [6.3000379]

=>P => $47,959 / 6.3000379

=>$7,612.49....(rounded to two decimals)

Equivalent uniform amount for a series of end of year CF\'s spanning 2011-2023 =>$7,612.49.