# cash flow question

Anonymous

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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