Let the given three cash flow series:
|
End of Year
|
Cash Flow Series A
|
Cash Flow Series B
|
Cash Flow Series C
|
| 0 |
-$1,000 |
-$2,500 |
Y |
| 1 |
X |
$3,000 |
Y |
| 2 |
1.5X |
$2,500 |
Y |
| 3 |
2.0X |
$2,000 |
2Y |
| 4 |
2.5X |
$1,500 |
2Y |
| 5 |
3.0X |
$1,000 |
2
|
Find values of X and Y so that all 3 cash flows are equivalent at the interest rate of 15% per year compounded yearly.