BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is the present value of a stream of annual end-of-the-year annuity cash flows if the discount rate is 0%, and the cash flows of $50 last for 20 years?
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Less than $1, 000
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Exactly $1, 000
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More than $1, 000
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This question cannot be answered because we have an interest rate of 0.0%.
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Explanation:
Detailed explanation-1: -Applying the formula, the present value of the annuity is: 100(1−(1+6%)−3)6%=267.30.
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