Answer: The correct answer is $333,333.33
Explanation: Perpetuity is a cashflow that is payable or receivable forever.
In calculating the present value of a Perpetuity, the cash flow will be divided by the rate.
That is $15,000/ 4.5%
=$15,000/ 0.045
=$333,333.33
The money to be set aside now to be able to pay $15,000 every year is $333,333.33
First, the conditions in the Central Valley of California are very favorable for growing almonds. The conditions include rich soil, a mild climate, abundant sunlight and good water supply. Also, the production of almonds from California has a higher yield than Spain which has been the world's top almond producer so California is competitive.
Peer pressure is negative if it causes someone to do something harmful.
Answer:
PV $54,509.5346
Explanation:
We will calcualte the present value of an annuity of 8,000 for 12 years at 10% discount rate:
The formula of annuity is:
C 8,000 dollars
time 12 years
rate 10% = 10/100 = 0.10
PV $54,509.5346
Answer:
NPV is positive,the project should be accepted
Explanation:
In determining whether or not the project should be accepted ,we need to ascertain the Net Present value of the project which is present value of cash inflows of $13,000 for 35 years minus the initial investment of $125,374.60 committed today.
The annuity factor for 8% for 35 year horizon is 11.6546 using annuity table.
Present of cash inflow=cash inflow*annuity factor=$13,000*11.6546=$151,509.80
Net present value=$ 151,509.80-$125,374.60=$ 26,135.20
The investment has a positive NPV,hence should be accepted
