Asked by ashanti morris on May 19, 2024
Verified
Investment project E has equal annual cash flows over its lifetime. The present value of the cash inflows from project E:
A) can be measured using the present value of an annuity.
B) must be measured year-by-year using a present value table.
C) can be measured using the future value of an annuity.
D) must be measured year-by-year using a future value table.
Present Value
The current value of a future amount of money or stream of cash flows, discounted back to the present using a specific discount rate.
Equal Annual Cash Flows
A series of identical cash amounts that occur at equal intervals over a period of time, commonly used in financial analysis.
Annuity
A financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.
- Assess the impending and present evaluations of investments under multiple scenarios.
Verified Answer
BW
Brian WeekmanMay 24, 2024
Final Answer :
A
Explanation :
The present value of an annuity can be used to measure the present value of equal annual cash flows over time. This can be calculated using a present value table or formula. Year-by-year measurement or future value of an annuity are not necessary in this case.
Learning Objectives
- Assess the impending and present evaluations of investments under multiple scenarios.