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4.

18 The following cash flow transactions are said to be


equivalent in terms of economic desirability at interest rate of
12 % compounded annually. Determine the unknown value A.

𝑃
𝑃01 = 𝐴( , 12%, 4)
𝐴
𝑃 𝑃
𝑃02 = 150 ( , 12%, 5) + 150( , 12%, 5)
𝐴 𝐺
𝑃01 = 𝑃02
𝐴(3.037) = 150(3.605) + 150(6.397)
𝐴(3.037) = 540 + 959.55 = 1499.55
𝐴 = 1499.55/3.037
𝐴 = 493.7602 = $493.76

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