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You are negotiating the cash flows of a potential investment that will contractually last the next five years. You are asked to invest $13,304 today
You are negotiating the cash flows of a potential investment that will contractually last the next five years. You are asked to invest $13,304 today and you will receive fixed payments of $509 at the end of each of the next four years. You will then receive one large, final payment at the end of the fifth year.
If you require a return of 17 percent per year on such an investment, what must the large, final cash value be such that the financial value (i.e., present value) of the cash flows you receive equal your initial cash investment?
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