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Determine the interest rate (i) that makes the pairs of cash flows shown economically equivalent.
Establishing equivalence at n=0, we find present value P1=A[(1+i)^N] -1 P1=2000[( 1+i ) ^6] P1=2000( P/A,I,6) g=0.25% For ig, P2=A[1-( 1+g) ^N (1+i ) ^-N]…

( 1+0.25 ) ^6( 1+i ) ^-6] P2=2500( P/A, 0.25%,I,6 ) solving for i with trial and error, we obtain i=98.65%

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