We need to spend $20,000 per year for 3 years on new restaurant equipment. How much...
- We need to spend $20,000 per year for 3 years on new restaurant
equipment. How much do we need to have in an account to afford this
if we earn 5% on our investments?
- __________________
- 20,000 _________
- _______ N
- _______ 1/Y
- CPT _______
- Answer: _____________
Homework Answers
| Amount to be in account | = | Annual cash flow | * | Present value of annuity of 1 | ||
| = | $ 20,000.00 | * | 2.723248 | |||
| = | $ 54,464.96 | |||||
| Working: | ||||||
| Present value of annuity of 1 | = | (1-(1+i)^-n)/i | Where, | |||
| = | (1-(1+0.05)^-3)/0.05 | i | = | 5% | ||
| = | 2.72324803 | n | = | 3 | ||
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