Calculating certainity equivalent.

Certainty equivalents mean that there is no risk so the risk free discount rate must be used. (Risk is eliminated by reducing the raw flows to their 'certain' equivalents.) So 50000/1.03 + 42,000/1.03^2 + 32,000/1.03^3 - 90,000 = 27,418 I think the model answer is wrong (or you have mis-typed something!)