Calculate the value of x for the cash flows below such that the equivalent total value in year 8 is $20,000, using an interest rate of 15% per year.Year          Cash flow, $                      Year             Cash flow, $0             2000                                      6                    x1             2000                                      7                    x2                x                                         8                    x3                x                                         9                10004                x                                        10               10005                x                                        11               1000

Asked Oct 24, 2019

Calculate the value of x for the cash flows below such that the equivalent total value in year 8 is $20,000, using an interest rate of 15% per year.

Year          Cash flow, $                      Year             Cash flow, $

0             2000                                      6                    x

1             2000                                      7                    x

2                x                                         8                    x

3                x                                         9                1000

4                                                      10               1000

5                x                                        11               1000


Expert Answer

Step 1

Equivalent value of a cash flow, Ct occurring at time t, at the end of year n = Ct x (1 + r)n - t where r = interest rate 

In this problem, n = 8 and r = 15%

Hence, the equivalent future...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in



Time Value

Related Finance Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: Computer A: Initial outlay=50,000,  cash inflow=7,000 for 6 years Computer B: Initial outlay=35,000 ...

A: Hi, please note that the discount rate for each project is not mentioned in the question. So, we are...


Q: the effects of increasing the amount paid upfront when corporations make capital purchases with a fo...

A: Capital expenditure is an expense, that generates profits for a longer period of time which can be m...


Q: Can someone please just give me the right answer to the right decimal places for the last part, "How...

A: It is given that,Required accumulated amount is $860,000.Number of years is 11. So, total number of ...


Q: Finance help

A: The purchase cost of new equipment is $328,000 and installation cost is $109,000. So, the total cost...


Q: Gabriel, an accountant, earns $360,000 from his practice. He also receives $9,100 in dividends and i...

A: a) Computation of AGI:Hence, the AGI, when Gabriel does not participates in the operation of the bus...


Q: What is the present value of $1,150 deposited at the end of each quarter year for 12 years earning 6...

A: Calculation of Present Value:The present value is $38,124.16.Excel Spreadsheet:


Q: If you invest $900 in a bank in which it will earn 8 percent compounded quarterly, how much will it ...

A: PV = $ 900; r = 8% compounded quarterly; m = frequency of compounding = 4 (as there are four quarter...


Q: Alshon, Inc. has 6.00% coupon bonds that have 11 years left until maturity. The bonds make annual pa...

A: Compute the current bond price:The current bond price is $897.08.Excel spread sheet:The future value...


Q: If mutually exclusive projects with normal cash flows are being analyzed, the net present value (NPV...

A: Net Present Value (NPV) is the method by which an investor accepts or reject the project by calculat...