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Consider a series of end-of-period CFs spanning 2042-2056, which increase at a 1.3% rate each period....

Consider a series of end-of-period CFs spanning 2042-2056, which increase at a 1.3% rate each period. The amount of the first CF in the series is $124. The interest rate is 3.8%. What is the equivalent uniform amount for a series of end-of-year CFs spanning the same time period? (answer: $134.73)

How do you get this answer? Either by hand or excel

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Answer #1

THE CASHFLOWS ARE:

CELL NUMBER YEAR CASHFLOWS
Q1 2042 124
Q2 2043 125.612
Q3 2044 127.244956
Q4 2045 128.8991404
Q5 2046 130.5748293
Q6 2047 132.272302
Q7 2048 133.991842
Q8 2049 135.7337359
Q9 2050 137.4982745
Q10 2051 139.285752
Q11 2052 141.0964668
Q12 2053 142.9307209
Q13 2054 144.7888203
Q14 2055 146.6710749
Q15 2056 148.5777989

THE NPV OF THE CASHFLOWS ARE= =NPV(0.038,O1:O15)=1519.17

EQUIVALENT PAYMENT=PMT(0.038,15,P1,0,0)=134.73

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