A project with an initial investment of 438500 will generate

A project with an initial investment of $438,500 will generate equal annual cash flows over its 9-year life. The project has a required return of 8 percent. What is the minimum annual cash flow required to accept the project?

$67,303.82

$76,305.47

$65,060.36

$70,194.95

$80,222.80

Solution

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

438500=Annuity[1-(1.08)^-9]/0.08

438500=Annuity*6.246887911

Annuity=438500/6.246887911

which is equal to

=$70194.95(Approx).