TVM: Suppose you have the cash flow

Suppose you have the cash flow sequence shown below. Choose the elements below to form the factor notation of the present value.

  • 7(P|A,i,9)/(1+i)^-1
  • 7(P|G,i,8)
  • -1(P|G,i,8)
  • 7(P|A,i,2)/(1+i)^-1
  • -1(P|G,i,8)/(1+i)
  • 7(P|A,i,8)

Answer:

P = 7(P|A,i,9)/(1+i)^-1 -1(P|G,i,8)

Constant series of 7 for 9 periods - Linear gradient of -1 for 7 outflows (+1 for the pot)

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