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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) 1
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) 1 Q ($5,100) 2 3Q ($4,500) 3 $1,600 (36Q) 4 $0 $0 5 120 ($8,500) 6 6 200 ($4,500) 7 $7,500 ($6,500) 8 $0 (16Q) a. If the value of Q is $2,750 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 6% 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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