Question

Consider a series of end-of-period CFs spanning 2042-2057, which decrease at a 1% rate each period....

Consider a series of end-of-period CFs spanning 2042-2057, which decrease at a 1% rate each period. The amount of the first CF in the series is $143. The interest rate is 3.3%. What is the equivalent value of this series at the beginning of 2042? (answer: $1,641.26) Can you show either by hand or excel?

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Answer #1

Answer is Equivalent amount is $1641.26

The explanation is as follows:

YEAR CASHFLOW PVF @ 3.3% PRESENT VALUE
2042 143.00 0.968 138.43
2043 141.57 0.937 132.67
2044 140.15 0.907 127.15
2045 138.75 0.878 121.85
2046 137.37 0.850 116.78
2047 135.99 0.823 111.92
2048 134.63 0.797 107.26
2049 133.29 0.771 102.80
2050 131.95 0.747 98.52
2051 130.63 0.723 94.42
2052 129.33 0.700 90.49
2053 128.03 0.677 86.72
2054 126.75 0.656 83.11
2055 125.49 0.635 79.65
2056 124.23 0.614 76.34
2057 122.99 0.595 73.16
Equivalent amount of series 1641.26
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