Question

Saved Discounted Cash Flow - Part 2 For each of the following annuities, calculate the annual cash flow. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Cash Flow Years Present Value $ 33,400 $ 31,150 $ 174,500 $ 248,700 Interest Rate 7 % 5 8 20 10 22 < Prev 1 of 7 Next MacBook Air

Answer 1

The annual cash flow can be computed with the help of below expression: Present value = Annual cash inflow xa, Present value = Annual cash inflow – Here, a, is the annuity factor. i is the interest. nis the number of years. To calculate annual cashflow for annuity 1, Substitute $33,400 for present value, 7% for i and 6 for n,

$33,400 = Annual cashflow x 1-(1+ 7%) 7% (0.3336577762 $33,400 = Annual cashflow 0.07 $33,400 = Annual cashflow x 4.76653966 $33,400 -=Annual cashflow 4.76653966 $7,007.18 = Annual cashflow To calculate annual cashflow for annuity 2, Substitute $31,150 for present value, 5% for i and 8 forn,

$31,150=Annual cashflow x1 = 1-(1+5%)) 5% $31,150=Annual cashflow (0.323160638 - 0.05 $31,150 = Annual cashflow x 6.463212759 $31,150 -=Annual cashflow 6.463212759 $4,819.58 = Annual cashflow To calculate annual cashflow for annuity 3, Substitute $174,500 for present value, 10% for i and 20 for n,

1-(1+10%) 20 $174,500 = Annual cashflow x = 10% 0.851356372 $174,500 = Annual cashflow - 0.10 $174,500 = Annual cashflow x8.51356372 $174,500 = Annual cashflow 8.51356372 $20,496.70 = Annual cashflow To calculate annual cashflow for annuity 4, Substitute $248,700 for present value, 9% for i and 22 for n,

1-(1 $248,700 = Annual cashflow x1 = 9% (0.8498182899 $248,700 = Annual cashflow x 0.09 $248, 700 = Annual cashflow x 9.442425443 $248, 700 -= Annual cashflow 9.442425443 $26,338.57 = Annual cashflow