Problem 25 3 points For the cash flows shown below if the in

Problem 2-5 (3 points) For the cash flows shown below, if the interest rate is 10% per year, determine the unknown value ‘X., Cash flow 1000 1200 Year $2000

Solution

Let solve it by PW (present worth method)

For cash flow series to be in balance means that PW of total cash flow should be zero.

-2000+1000/1.1+X/(1.1*1.1)+1200/(1.1*1.1*1.1)=0

-2000+909.09+X/1.21+901.58=0

X=229.09