Business, 21.09.2019 12:10 jasminecoronetti44

Three years from now you will begin receiving annual payments of? $7,200. this will continue for 14 years. at a discount rate of? 5.8%, what is the present value of this stream of cash? flows?

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The type of annuity presented above is a deferred annuity because the payment starts sometime in the future. The present worth of deferred annuity is calculated through the equation,

PV = R x ((1 - (1 + i)^-n)/ i) (1 + i)^-k

where PV is the present worth
R is payment = $7200
n is the total number of payments to be made = 14
k is the deferred period = 3
i is interest = 0.058

Substituting the known values,
PV = ($7,200) ((1 - (1 + 0.058)^-14) / 0.058)(1 + 0.058)^(-3)
PV = $57,216

Thus, the present worth of the deferred annuity is approximately $57,216.3.

Answer from: 2sally2

The cash flow is considered to be a deferred one because the annual payments is made on a later date. The formula for finding the present value (PV) of a deferred annuity is given as:

PV of annuity = A * ((1 - (1 + i)^-n)/ i) (1 + i)^-k

Where,

A = annual payments = 7,200

i = interest rate = 5.8% = 0.058

n = number of years = 14

k = deferred years = 3

Substituting the given values into the formula:

PV = 7,200 * [(1 – (1 + 0.058)^-14) / 0.058] (1 + i)^-3

PV = 57,216.29

Therefore the present value is about $57,216.29

Answer from: Quest

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Answer from: Quest

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7. customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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