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The interest rate is 8.5% compounded annually. Consider the following cash flow. Year 0: (-$68) Year 1: $0 Year 2: $104 Year 3: $142 Year
The interest rate is 8.5% compounded annually. Consider the following cash flow. Year 0: (-$68) Year 1: $0 Year 2: $104 Year 3: $142 Year 4: $191 Year 5: $233 Find the value of A --where you receive A 6 times (years 0-5)--that is economically equivalent to the preceding cash flow. HINT: This is different than the normal equal payment series because you are also receiving A in year O
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