Question
A 5-year project has a risk-adjusted discount rate of 8% p.a. The investment would be needed right away (i.e., in 2021), and sales will occur
A 5-year project has a risk-adjusted discount rate of 8% p.a. The investment would be needed right away (i.e., in 2021), and sales will occur from 2022 to 2026. You've already crunched the numbers and found the cash flows (CF) associated with the project, which are shown below. For simplicity, assume the given CF are in dollars (i.e., not thousands nor millions of dollars). Year 2021 2022 2023 2024 2025 2026 CF -225 177 142 136 170 236 Find the value of the equivalent annuity for this project. Round your answer to the nearest dollar. (Acceptable error = $2)
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