For the given cash flow, if the equivalent uniform annual payments is $5000 and the interest rate is 25% per year. End of 1 3 4 6. 7. Year Cost 2A 2A+30 2A+60 2A+90 2A+120 2A+150 2A+180 2A+210 2A+240 Determine the amount of (A) ? Determine the equivalent present value? 00

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A: Given information :

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A: Please refer to the image below

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A:

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.