Two receipts of $1,000 each are desired at the EOYS 10 and 11. To make these receipts possible, four EOY annuity amounts will be deposited in a bank at EOYS 2,3,4, and 5. The bank's interest rate (i) is 12% per year. (a) Draw a cash-flow diagram for this situation. (b) Determine the value of A that establishes equivalence in your cash-flow diagram. (c) Determine the lump-sum value at the end of year 11 of the completed cash- flow diagram based on your answers to Parts (a) and (b).

Two receipts of $1,000 each are desired at the EOYS 10 and 11. To make these receipts possible, four EOY annuity amounts will be deposited in a bank at EOYS 2,3,4, and 5. The bank's interest rate (i) is 12% per year. (a) Draw a cash-flow diagram for this situation. (b) Determine the value of A that establishes equivalence in your cash-flow diagram. (c) Determine the lump-sum value at the end of year 11 of the completed cash- flow diagram based on your answers to Parts (a) and (b).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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