Miss Nadia has to choose the better of two equally costly cash flow st
QUESTION
Miss Nadia has to choose the better of two equally costly cash flow streams,annuity A and annuity B. Annuity A is an annuity due with a cash inflow of&nbs
Annuity A Type of Annuity Annuity due Annual Cash Inflow 9000 No of Periods 6 Years Rate 15% From the Future Value of AnnuityDue Tables, Future Value Factor 10.067 Future Value of Annuity due for the CashFlows 10.67 * 9000 Future Value ofAnnuity 90601 due for AlternativeA _________________________________________________________________________________ AlternativeB Type of Annuity Ordinary Annual Cash Inflow 10000 No of Periods 6years Rate 15%
From the Future Value of OrdinaryAnnuity Tables , Future Value Factor 8.754 Future Value of Ordinary 8.754 * 10000 Annuity for alternative B 87540 Future Value For 87540 AlternativeB ______________________________________________________________________________________Decision : Go for AlternativeA
ANSWER:
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