Considerthe followingcash flow:
Year Cash Flow
0...................-$P
1...............+ 1000
2................+850
3................+700
4................+550
5................+400
6............... +400
7................+400
8................+400
Alice was asked to compute the value of P for the cash flow at 8%interest. She wrote three equations:
(a) P = 1000(P/A, 8%, 8) -150(P/G, 8%, 8) + 150(P / G, 8%, 4)(P / F, 8%,4)
(b) P = 400(P / A, 8%, 8) + 600(p / A, 8%, 5)'- 150(P / G, 8%,4)
(c) P = 150(P / G, 8%,4) + 850(P / A, 8%,4) + 400(P / A, 8%, 4)(P / F, 8%,4)
Which of the equations is correct?