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Compounded Annual Growth Rate for Cash Flow Stream

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P3-38. You are given the series of cash flows shown in the following table.

Cash Flows

Year A B C

1 $500 $1,500 $2,500
2 560 1,550 2,600
3 640 1,610 2,650
4 720 1,680 2,650
5 800 1,760 2,800
6 1,850 2,850
7 1,950 2,900
8 2,060
9 2,170
10 2,280

a. Calculate the compound annual growth rate associated with each cash flow stream.

b. If year-1 values represent initial deposits in a savings account paying annual interest, what is the annual rate of interest earned on each account?

c. Compare and discuss the growth rate and interest rate found in parts a and b, respectively.

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