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

Question

3 years ago

6

ate of return compounded annually. What is the maximum amount that David can pay and still earn the required rate of return?

1 answer:

Inessa05 [86] · Answer 1 · 2021-12-12T11:59:35+03:00

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

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