Question

The following cash flows are equivalent at 8% for what value of Y?

End of Year	0	1	2	3	4	5
CF1, $	-$15,000	$5,000	$5,000	$5,000	$5,000	$5,000
CF2, $	Y?	$8,000	$7,000	$6,000	$5,000	$4,000

Answer 1

Formula

As the two cash flows are equivalent, we can say

4963.550185 = y+25249.83784

or, y = 4963.550185-25249.83784 = -20286.28766