Question: Consider the three equivalent CFDs below. Note that the cash flows are not drawn to scale. Assume i = 5% and X and Y
Consider the three equivalent CFDs below. Note that the cash flows are not drawn to scale. Assume i = 5% and X and Y are both positive values. For each of the following questions, use the end of period 3 as the common time basis whenever comparing any CFDs. Try cancelling out similar terms before plugging in any values. CFD 1 CFD 2 not drawn to scale -40 40 40 -40 60 = -h -40 3 -10 -20-Y -30-7 CEO 3 X+Y -100 S -Y -Y 3 3a. Determine the value of Y. Round off to the nearest 4 decimal places. (Hint: Compare CFD 1 with CFD 3) [20pts] 3b. Determine the value of X. Round off to the nearest 4 decimal places. (Hint: Compare CFD 2 with CFD 3) [30pts]
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