Zetterberg Builders is given two options for making payments on a brush hog. Find the value of X such that they would be indifferent between the two cash flow profiles if their TVOM is 4.5% per year compounded yearly.
|
End of Year
|
Series 1
|
Series 2
|
| 0 |
$300 |
$0 |
| 1 |
$350 |
$0 |
| 2 |
$400 |
$35X |
| 3 |
$450 |
$25X |
| 4 |
$0 |
$15X |
| 5 |
$0 |
$5X
|