For the following find the equivalent present value for cash disbursements given in the table: a) An interest rate of 12% compounded annually b) An interest rate of 12% compounded continuously c) An interest rate of 12% compounded semiannually EOY Disbursement 0 1 4000 2 4000 3 4000 4 4000 5 7000 6 7000 7 7000
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Using this formula, we can calculate the present value for each cash disbursement: Year 1: PV = 4000 / (1 + 0.12)^1 = 3571.43 Year 2: PV = 4000 / (1 + 0.12)^2 = 3185.04 Year 3: PV = 4000 / (1 + 0.12)^3 = 2836.99 Year 4: PV = 4000 / (1 + 0.12)^4 = 2524.89 Year 5: Show more…
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