Mercy receives the following cash flow from her rich uncle every year and she wants you...

Question

Question

Answer 1

Answer #1

Answer :

Rate of interest = 12%

Present worth = CF₁/(1+r)¹+ CF₂/(1+r)²+ CF₃/(1+r)³+ CF₄/(1+r)⁴+ CF₅/(1+r)⁵

= $6,397

Uniform annual Equivalent value = r(NPV) / (1 - (1+r)^-n)

= 0.12(6397) / ( 1 - (1+0.12)^-5)

= $1,774.60

Answer 2

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