cash flow question

timer Asked: Nov 6th, 2016

Question description

It is known that two cash flows are economically equivalent at an interest rate of 12%: 

• Cash Flow 1: Payments of $100 at the end of Years 1 and 2, and Payments of $300 at the end of years 3, 4 and 5.

 • Cash Flow 2: Payments of $X at the end of Years 1, 2, 4 and 5.

 a) Draw the cash flow diagrams for each of these cash flows

 b) Calculate X in the Cash Flow #2 using both interest relationships and interest tables

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