Calculate the future value of the two payments

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Question: Calculate the EUAB over a 6 year period of two payments - one of $20,000 in year 2 and another of $10,000 in year 4. The Equivalent Uniform Annual Benefit is the amount of evenly distributed yearly payments that would generate the same present or future value. Use i = 6% and show calculations.

- Draw the Cash Flow Diagram:

- Calculate the Future value F of the two payments in year 6.

- Calculate the value of 6 equal annual payments that will equal F (A given F). This is the EUAB.

- Calculate the Present value P of the two payments in year 0.

- Calculate the value of 6 equal annual payments that will equal F (A given F). Confirm this is the same EUAB.

Reference no: EM131880761

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