Answer to Question #315872 in Financial Math for j.o.e.l

Question

a) Consider a 20year project with the following portion of cash flows.

Years Cash flows

1-6 years 4,000 p.a.

7-10 years 5,000 p.a.

11-17 years 8,000p.a.

18-20 years 12,000 p.a.

Suppose the cost of capital is 12%. The annuity between years 11-14 is received at the beginning of each period. Calculate the present value of the differential annuity.