This question introduces you to the concept of an annuity with growth. The formulae is given on p.3,

USA Ussays > Uncategorized > This question introduces you to the concept of an annuity with growth. The formulae is given on p.3,

This question introduces you to the concept of an annuity with growth. The formulae is given on p.3,

This question introduces you to the concept of an annuity with growth. The formulae is given on p.3, equation (7), of the Note on Formulae, but I would encourage you to try doing it in Excel as well. (If the first cash flow is C, the next one will be C(1+g), and so on, where g is the growth rate in cash flow). As an example, the present value of an annuity that starts one year from now at $100, and grows at 5%, with the last cash flow in year 10, when the discount rate is 7%, is $860. Confirm this before attempting the problem using both the formula and excel. What is the NPV of of a new software project that costs $900,000 today, but has a cash flow of $180,000 in year 1 that grows at 7.0% per year till year 20? Similar by PriceMinus” style=”font-family: inherit; font-size: inherit; font-style: inherit; font-variant: inherit; font-stretch: inherit; line-height: inherit; color: rgb(0, 102, 153); outline: none; left: auto; opacity: 1; top: auto; margin: 0px 0px 0px 3px !important; padding: 0px !important; border: 0px !important; font-weight: 700 !important; vertical-align: baseline !important; text-decoration: underline !important; box-sizing: border-box !important; bottom: auto !important; clip: auto !important; clear: none !important; display: inline-block !important; float: none !important; height: auto !important; max-height: none !important; max-width: none !important; min-height: 0px !important; min-width: 0px !important; overflow: visible !important; position: static !important; right: auto !important; text-transform: uppercase !important; -webkit-transform: none !important; transform: none !important; visibility: visible !important; width: auto !important; zoom: 1 !important; z-index: auto !important; background: 0px 0px !important;”>INVESTMENTS earn 7.6% per year.

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  • AnonymousAnonymous answered this 9 minutes later660 answers• 65% Best Answer
    Particulars Time PVF Amount PV
    Cash Outflows – 1.0000 (900,000.00) (900,000.00)
    PV of Cash Outflows (900,000.00)
    Cash Inflows 1.00 0.9294 180,000.00 167,286.25
    Cash Inflows 2.00 0.8637 192,600.00 166,353.42
    Cash Inflows 3.00 0.8027 206,082.00 165,425.80
    Cash Inflows 4.00 0.7460 220,507.74 164,503.35
    Cash Inflows 5.00 0.6933 235,943.28 163,586.05
    Cash Inflows 6.00 0.6444 252,459.31 162,673.86
    Cash Inflows 7.00 0.5988 270,131.46 161,766.75
    Cash Inflows 8.00 0.5565 289,040.67 160,864.71
    Cash Inflows 9.00 0.5172 309,273.51 159,967.69
    Cash Inflows 10.00 0.4807 330,922.66 159,075.68
    Cash Inflows 11.00 0.4468 354,087.24 158,188.64
    Cash Inflows 12.00 0.4152 378,873.35 157,306.55
    Cash Inflows 13.00 0.3859 405,394.49 156,429.37
    Cash Inflows 14.00 0.3586 433,772.10 155,557.09
    Cash Inflows 15.00 0.3333 464,136.15 154,689.67
    Cash Inflows 16.00 0.3097 496,625.68 153,827.09
    Cash Inflows 17.00 0.2879 531,389.47 152,969.32
    Cash Inflows 18.00 0.2675 568,586.74 152,116.33
    Cash Inflows 19.00 0.2486 608,387.81 151,268.10
    Cash Inflows 20.00 0.2311 650,974.96 150,424.60
    PV of Cash Inflows 3,174,280.33
    NPV 2,274,280.33