Question
In: Finance
A project that will last for 9 years is expected to have equal annual cash flows...
A project that will last for 9 years is expected to have equal annual cash flows of $100,000. If the required return is 8.3 percent, what maximum initial investment would make the project acceptable?
Solutions
Expert Solution
| Maximum initial investment | P×[1-(1÷(1+r)^n)]÷r | |
| Here, | ||
| A | Interest rate per annum | 8.30% |
| B | Number of years | 9 |
| C | Number of compoundings per per annum | 1 |
| A÷C | Interest rate per period ( r) | 8.30% |
| B×C | Number of periods (n) | 9 |
| Payment per period (P) | $ 100,000 | |
| Maximum initial investment | $ 616,970.26 | |
| 100000×(1-(1÷(1+8.3%)^9))÷8.3% |
jeff jeffy answered 1 year agoRelated Solutions
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