Answer to Question #315808 in Financial Math for j.o.e.l

Question

1.   XYZ limited has project which is expected to yield the following cash flows:

Years

Cash flows

1-4

10,000

5-11

15,000

12-17

20,000

18-Infinity

30,000

 

The annuity between year 5-9 is received at the beginning of each period. The cost of capital is 12%. Calculate the present value of the differential annuities using the two approaches