In the following information, determine the number of years that the annual end-of-year cash flow...
Question:
In the following information, determine the number of years that the annual end-of-year cash flow must continue in order to provide the rate of return on the initial amount.
Initial Amount: $73,900
Annual Cash Flow: $13,779
Rate of Return: 8%
(Round answer to two decimal places.)
Present Value of annuity:
When the same amount of cash flows is receivable, after a fixed time gap, it is called an annuity. Its discounted value is called PV of the annuity. Details such as annual amount receivable and interest rate, number of years are used to get the PV of the annuity.
Answer and Explanation: 1
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View this answerThe number of years required to earn 8% will be calculated using the present value of the annuity method, where,
P=Annuity
I=rate of return
N=numbe...
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Present & Future Values of Multiple Cash Flows
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Chapter 6 / Lesson 1
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The value of investments changes over time, and this can be applied to multiple cash flows. Identify how to calculate both the present and future values applied specifically to cash flows.
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