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ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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![**Transcription and Diagram Explanation for Educational Website:**
---
**Objective:**
Determine the present equivalent value of the cash-flow diagram provided below, given the variable annual interest rates (\(i_k\)).
**Cash-Flow Diagram:**
- **Years and Cash Flows:**
- **Year 0:** Present value \(P = ?\)
- **Year 1:** $2,000
- **Year 2:** No cash flow
- **Year 3:** $4,000
- **Year 4:** No cash flow
- **Year 5:** $2,000
- **Year 6:** $4,000
- **Interest Rates:**
- **\(i_1 = 15\%\) for Year 1**
- **\(i_2 = 12\%\) for Year 2**
- **\(i_3 = 15\%\) for Year 3**
- **\(i_4 = 6\%\) for Year 4**
- **\(i_5 = 6\%\) for Year 5**
- **\(i_6 = 6\%\) for Year 6**
**Interactive Elements:**
- **Interest and Annuity Tables:**
1. *Access the table for discrete compounding when the interest rate (\(i\)) is 6% per year.*
2. *Access the table for discrete compounding when the interest rate (\(i\)) is 12% per year.*
**Calculation:**
To find the present equivalent value, click the respective icons for interest and annuity tables depending on the interest rates provided above.
**Result:**
The present equivalent value is $[ \_\_ ]. (Round to the nearest cent.)**
---
*Note: Ensure to round your final result to the nearest cent as instructed.*](https://content.bartleby.com/qna-images/question/57ce95b0-55bf-4b74-8a30-95af5babada9/9531b59a-2df4-4d25-825b-5154e313df5f/umlcyvt_thumbnail.jpeg)
Transcribed Image Text:**Transcription and Diagram Explanation for Educational Website:**
---
**Objective:**
Determine the present equivalent value of the cash-flow diagram provided below, given the variable annual interest rates (\(i_k\)).
**Cash-Flow Diagram:**
- **Years and Cash Flows:**
- **Year 0:** Present value \(P = ?\)
- **Year 1:** $2,000
- **Year 2:** No cash flow
- **Year 3:** $4,000
- **Year 4:** No cash flow
- **Year 5:** $2,000
- **Year 6:** $4,000
- **Interest Rates:**
- **\(i_1 = 15\%\) for Year 1**
- **\(i_2 = 12\%\) for Year 2**
- **\(i_3 = 15\%\) for Year 3**
- **\(i_4 = 6\%\) for Year 4**
- **\(i_5 = 6\%\) for Year 5**
- **\(i_6 = 6\%\) for Year 6**
**Interactive Elements:**
- **Interest and Annuity Tables:**
1. *Access the table for discrete compounding when the interest rate (\(i\)) is 6% per year.*
2. *Access the table for discrete compounding when the interest rate (\(i\)) is 12% per year.*
**Calculation:**
To find the present equivalent value, click the respective icons for interest and annuity tables depending on the interest rates provided above.
**Result:**
The present equivalent value is $[ \_\_ ]. (Round to the nearest cent.)**
---
*Note: Ensure to round your final result to the nearest cent as instructed.*
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