Question

Find the value of "t," the equivalent uniform flow of the given set of flows if the interest rate is 8% per period.

A) Present value
B) Future value
C) Annual percentage yield
D) Discount rate

Answer 1

The value of "t" can be found by calculating the present value of the given set of flows using the present value formula.

Step-by-step explanation:

The value of "t" can be obtained by finding the present value of the given set of flows. The present value formula is:

PV = R / (1 + i)^t

Where PV is the present value, R is the future value, i is the interest rate, and t is the time period in years.

Using the formula, we can find the present value of each flow and add them up to find the equivalent uniform flow:

1. Present value of $15 million: $15 million / (1 + 0.08)^0 = $15 million
2. Present value of $20 million: $20 million / (1 + 0.08)^1 = $18.518 million
3. Present value of $25 million: $25 million / (1 + 0.08)^2 = $21.408 million

The equivalent uniform flow is the sum of the present values: $15 million + $18.518 million + $21.408 million = $54.926 million.