Economicssuppose that we have cash flows as follows:End of Year Cash Flows($)18,00027,00036,00045,000Calculate the annual equivalent value at theend of each year at i=17% per year?

Annual equivalent value can be calculated by multiplying Present Value factor @17% with cash flows…

Answered: Calculate the annual equivalent value…

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Calculate the annual equivalent value at the end of each year at i=17% per year?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 19E

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Economics
suppose that we have cash flows as follows:
End of Year Cash Flows($)
1
8,000
2
7,000
3
6,000
4
5,000
Calculate the annual equivalent value at the
end of each year at i=17% per year?

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