Question
8.) You are evaluating an investment that will provide the cash flows listed below at the end of each year. You believe that you should
8.) You are evaluating an investment that will provide the cash flows listed below at the end of each year. You believe that you should earn 11.50% percent compounded annually on this investment. How much would you be willing to pay for this investment?
Year 1 2 3 4 5
CFs 200,000 225,000 275,000 325,000 3,500,000
I
PV
Step by Step Solution
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Step: 1
The formula to calculate the Present Value PV of an annuity is PV PMT x 1 1 rn r Where PV is the pre...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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