MS 303 QUIZ 3_solution

MS 303 QUIZ 3_solution - Left side = $1200( P / A, 12 %, 4)...

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MS 303 Quiz 3 1) In the accompanying diagram, what is the value of G on the right hand cash-flow diagram that is equivalent to the left hand chas-flow diagram? Let i=%12 per year. Solution: Using time 3 as the equivalence point, Po(rhs)=Po(lhs) $100 + $100(P/F,12%,1)= G(P/G,12%,4)(P/F,12%,3) G=64,436 $100 $100 3G .... 5 6 7 G 2G 0 1 2
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2) If the two cash flows are equal to each other, find the value of X by using uniform and gradient series. (Interest rate is 12 % per year and periods in the cash flow are annually). If we take the 0. th year as the reference point,
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Unformatted text preview: Left side = $1200( P / A, 12 %, 4) (P / F, 12%, 4) + $800( P / G, 12 %, 4) (P / F, 12%, 4) + $1000 ( P / A, 12 %, 4) (P / F, 12%, 8) + $500 ( P / G, 12 %, 4) (P / F, 12%, 8) Left Side = $1200 * (3,0373) * (0,6355) + $800 * (4,127) * (0,6355) + $1000 * (3,0373) * (0,4039) + $500 * (4,127) * (0,4039) = $ 6474,6 Right Side= X (P / F, 12%, 3) + X (P / F, 12%, 5) = X * (0,7118) + X * (0,5674) = 1,2792 X Left Side = Right Side 1,2792 X = $ 6474,6 X = $ 5061,44 $1200 5 7 8 6 9 10 11 12 $2000 $2800 $3600 $1000 $1500 $2000 $2500 3 5 $X $X...
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This note was uploaded on 03/16/2012 for the course FENS 101 taught by Professor Selçukerdem during the Fall '12 term at Sabancı University.

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MS 303 QUIZ 3_solution - Left side = $1200( P / A, 12 %, 4)...

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