A project with an initial investment of $446,900 will generate equal annual cash flows over its...
A project with an initial investment of $446,900 will generate equal annual cash flows over its 8-year life. The project has a required return of 8.7 percent. What is the minimum annual cash flow required to accept the project?
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$91,251.78
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$76,884.10
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$87,902.91
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$74,321.30
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$79,845.31
Homework Answers
Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
446,900=Annuity[1-(1.087)^-8]/0.087
446,900=Annuity*5.59707273
Annuity=446,900/5.59707273
=$79,845.31(Approx).
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