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The Swell Computer Company Has Developed a New Line of Desktop

Question 29

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The Swell Computer Company has developed a new line of desktop computers. It is estimated that the cash returns generated by the new product line will be $800,000 per year for the next five years, and then $500,000 per year for 3 years after that (the cash returns occur at the end of each year). At a 9% interest rate, what is the present value of these cash returns?
The Swell Computer Company has developed a new line of desktop computers. It is estimated that the cash returns generated by the new product line will be $800,000 per year for the next five years, and then $500,000 per year for 3 years after that (the cash returns occur at the end of each year). At a 9% interest rate, what is the present value of these cash returns? Solve as the sum of two annuities: one of $500,000 per period for 8 periods, and one of $300,000 per period for 5 periods. Solve as the sum of two annuities: one of $500,000 per period for 8 periods, and one of $300,000 per period for 5 periods.

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