Question

Two lump sum cash flows (each one is $1,000) located at year 3 and year 6.

Combining these two cash flows into one, based on time value of money
theory, and find its equivalent annual annuity amount located from year 3
to year 7 at an annual interest rate of 8%?
O 416
438
O 453
O 478

Answer 1

To find the equivalent annual annuity amount for combining two cash flows, we can use the annuity formula. In this case, the equivalent annual annuity amount is (option B) approximately $438.

Step-by-step explanation:

To find the equivalent annual annuity amount for combining two cash flows, we can use the annuity formula:

A = (C × r) / (1 - (1 + r)^-n)

Where A is the annuity amount, C is the cash flow, r is the interest rate, and n is the number of years.

In this case, we have two cash flows of $1,000 each, located at year 3 and year 6. We want to find the equivalent annual annuity amount located from year 3 to year 7 at an annual interest rate of 8%. Plugging in the values, we have:

A = (1000 × 0.08) / (1 - (1 + 0.08)^-5)

Solving this equation gives us an equivalent annual annuity amount of (option B) approximately $438.

Answer 2

need points.

Step-by-step explanation:

478

di ko alam kung yan yung sagot lero based on my calvulation mali yan hahahahhaa