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ILL UPVOTE 100%!!! Draw out the time line. Time line must include all cash flows stipulated in the problem occurring at the time period stipulated in the problem. On the time line, include arrows indicating the compounding or discounting of cash flows to the desired time period. Under the time line, hand written explanation of your plan to solve the problem. Suppose that you just paid $76,000 for a security that will make its first payment to you in 7 years from today. It will continue to make equal annual payments every year indefinitely. Find the size of the payments that you will receive from the security if the interest rate is 5% Show transcribed image text Expert Answer Anonymous answered this 6 answers Was this answer helpful? 21 Please refer the below Step by step solution J B D E F H 1 1 Given 2 Initial; Cash Flow 2 ; 76000 3 3 Discount rate 5% 4 Suppose the annual cash flow in 7th year is X, which will flow till perpetuity 5 6 Step-1 7 Formulae 8 Present Value of Annual Cash flow till perpetuity =Annual Cash Flow/Discount Rate 9 10 In the given case 11 PV at the 7th year = x/0.05 12 13 Step-2 14 Years: 0 1 2 3 4 5 6 7 15 Discount Rates: 0 0.952381 0.907029 0.863838 0.822702 0.783526 0.746215 0.710681 16 Cash Flows: 76,000.00 X/0.05 17 18 Step-3 19 Answer 20 Equation 21 76000 = 0.710681X/0.05) 22 X = 76000*0.05/.0710681 23 X = 5346.984 24 25 If the interest rate is 5%, we will be receiving 5346.98, aunnally from the 7th year 26