A firm is considering a project with an annual cash flow of $100,000. The project would...
A firm is considering a project with an annual cash flow of $100,000. The project would have an 8-year life, and the company uses a discount rate of 5%. What is the maximum amount the company could invest in the project and have the project still be acceptable?
Homework Answers
| Annual cash flows | 100000 | |
| X PV factor | 6.463 | =(1-(1.05)^-8)/0.05 |
| Maximum amount the company can invest | 646300 | |
| Note: If PV factor is not rounded off, maximum amount will be $646321 | ||
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