Question

You anticipate a cash flow of $900 at the end of year 1, $500 at the end of year 2, and $400 at the end of year 4. What is the annual equivalent of the cash flow for years 1 through 4?

Answer 1

annual equivalent of the cash flow for years 1 through 4 = $1629.90

Step-by-step explanation:

cash flow at the end of Year 1 = $900

cash flow at the end of Year 2 = $500

cash flow at the end of Year 4 = $400

annual equivalent of the cash flow for years 1 through 4? at an interest rate of 6% annually

= 900/1.06 + 500/1.06 x 1.06 + 400/1.06x1.06x1.06

= $1629.90 is the present value of the different cash flow