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photoshop1234 [79]
4 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]4 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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Option B is correct one.

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3 years ago
A career pathway is:
qwelly [4]
I think the better one is D.
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3 years ago
You have been offered a project paying​ $300 at the beginning of each year for the next 20 years. What is the maximum amount of
Vitek1552 [10]

Answer:

The project is worth $2,738.57.

Explanation:

Giving the following information:

You have been offered a project paying​ $300 at the beginning of each year for the next 20 years. The rate of return is 9%.

To calculate the present value, first, we need to calculate the final value:

FV= {A*[(1+i)^n-1]}/i

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FV= {300*[(1.09^20)-1]}/0.09

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Now, we can calculate the present value:

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Answer:

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