This depicts an example problem with a series of year-end cash flows extending over eight years. The amounts are $100 for the first year, $200 for the second year, $500 for the third year, and $400 for each year from the fourth through the eighth. These could represent something like the expected maintenance expenditures for a certain piece of equipment or payments into a fund. Note that the payments are shown at the end of each year, which is a standard assumption (convention) for this book and for economic analyses in general, unless we have information to the contrary. Using an annual interest rate of 5%, it is desired to find:
(a) the present value of the cash flows
(b) the future value of the cash flow
(c) the annual equivalent value, A