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Consider a series of end-of-period CFs spanning 2042-2059, which increase by a fixed amount each period....

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Finance

Consider a series of end-of-period CFs spanning 2042-2059, whichincrease by a fixed amount each period. The amount of the first CFin the series is $126 and the increment is $53. The interest rateis 3.0%. What is the equivalent value of this series at thebeginning of 2042?

Answer & Explanation Solved by verified expert
4.0 Ratings (463 Votes)

PV = 7351.67

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Year

Cash flow

PV factor @3%

PV of cash flow

2042

126

0.970873786

122.3300971

2043

179

0.942595909

168.7246677

2044

232

0.915141659

212.312865

2045

285

0.888487048

253.2188087

2046

338

0.862608784

291.5617691

2047

391

0.837484257

327.4563444

2048

444

0.813091511

361.012631

2049

497

0.789409234

392.3363895

2050

550

0.766416732

421.5292028

2051

603

0.744093915

448.6886307

2052

656

0.722421277

473.9083574

2053

709

0.70137988

497.2783351

2054

762

0.68095134

518.8849211

2055

815

0.661117806

538.8110117

2056

868

0.641861947

557.1361703

2057

921

0.623166939

573.936751

2058

974

0.605016446

589.2860183

2059

1027

0.587394608

603.254262

Total

7351.667233

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Transcribed Image Text

Consider a series of end-of-period CFs spanning 2042-2059, whichincrease by a fixed amount each period. The amount of the first CFin the series is $126 and the increment is $53. The interest rateis 3.0%. What is the equivalent value of this series at thebeginning of 2042?

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