Homework Answers
Present value of annuity due=(1+Rate)*Annuity[1-(1+interest rate)^-time period]/rate
=1.1*10,000[1-(1.1)^-20]/0.1
=10,000*9.36492009
=$93649.20
NPV=Present value of inflows-Present value of outflows
=93649.20-100,000
=($6350.8)(Negative)(Approx)
Hence since net present value is negative;wealth is being destroyed.
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