Find the equal series of annual payments that is equivalent

Find the equal series of annual payments that is equivalent to the following series of cash flows if the interest rate is 8%. Ans. $xxxxx Year Cash Flow 1S12,500 2$13,000 3 $13,500 $14,000 S14,500

Solution

Year Cash flows PVF @ 8% Present value 1 12500 0.925926 11574.07 2 13000 0.857339 11145.4 3 13500 0.793832 10716.74 4 14000 0.73503 10290.42 5 14500 0.680583 9868.456 Present value of Inflows 53595 Divide: Annuity factor 3.9927 Annualised Equivalent Cash flows 13423.25 Annual Equal cash flows is $ 13423.25