EOY Cash Flow EOY Cash Flow - $45,000 5 $8,000 1 $12,000 $7,000 2 $11,000 7 $6,000 3 $10,000 8 $5,000 4 $9,000

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Consider the following cash flow profile: Suppose the positive-valued cash flows are now replaced by a geometric series. If the cash flow at end of year 1 is $10,000, what geometric rate is required for the cash flow profiles to be equivalent? Interest is at a compounded annual rate of 6%.

EOY Cash Flow EOY Cash Flow
- $45,000
5
$8,000
1
$12,000
$7,000
2
$11,000
7
$6,000
3
$10,000
8
$5,000
4
$9,000
Transcribed Image Text:EOY Cash Flow EOY Cash Flow - $45,000 5 $8,000 1 $12,000 $7,000 2 $11,000 7 $6,000 3 $10,000 8 $5,000 4 $9,000
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