10 pts ThetwocashflowsinFigurel are said to be economically

(10 pts) ThetwocashflowsinFigurel are said to be economically equivalent at 4% interest. What is the value of V 3. $200 $150 $120 $100 $100 $100 2 Fgun 1 - Equhalent Cash Flows

Solution

Year Cash flows PVF @ 4% Present value 0 100 1 100 1 100 0.961538 96.15385 2 120 0.924556 110.9467 3 150 0.888996 133.3495 4 200 0.854804 170.9608 5 100 0.821927 82.19271 Present value 693.6 As per given problem 0.889 V= 693.60 V = 780