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photoshop1234 [79]
3 years ago
6

David has purchased an investment that he expects to produce an annual cash flow of​ $3,000 for five years. He requires an​ 8% r

ate of return compounded annually. What is the maximum amount that David can pay and still earn the required rate of​ return?
Business
1 answer:
Inessa05 [86]3 years ago
8 0

Answer:

Explanation:

In order to find the highest amount david can pay or in other words the present value of the investment we would have to discount the cash flows

3000/1.08+3000/1.08^2+3000/1.08^3+3000/1.08^4+3000/1.08^5=11,978

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