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The cash flow for a company for their investment account is shown in the table below: Cash Year Cash Inflow Outflow 0 $50,000 ($2,000) Q
The cash flow for a company for their investment account is shown in the table below: Cash Year Cash Inflow Outflow 0 $50,000 ($2,000) Q ($5,100) 2 3Q ($4,500) 3 $1,600 (360) 1 4 $0 $0 120 5 6 200 ($8,500) ($4,500) ($6,500) (160) 7 $7,500 8 $0 a. If the value of Q is $3,000 at what interest rate will the net cash flow be balanced and equivalent? (Hint: at what interest rate per year NPW is equal to zero) b. If the interest rate is 9% per year compounded yearly, for what value of Q will the cash flow have equivalence? (Hint: for what value of Q, NPW is equal to zero)
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