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    End-of-year cash flow

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    P3-15. For the following questions, assume an end-of-year cash flow of $250 and a 10 percent discount rate.

    a. What is the present value of a single cash flow?
    b. What is the present value of a 5-year annuity?
    c. What is the present value of a 10-year annuity?
    d. What is the present value of a 100-year annuity?
    e. What is the present value of a $250 perpetuity?
    f. Do you detect a relationship between the number of periods of an annuity and its
    resemblance to a perpetuity?

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    https://brainmass.com/business/annuity/end-year-cash-flow-168780

    Solution Preview

    Please see the attached file.

    a. PV = $250 × (1.10)-1 = $227.27

    b. PV = $250 × [ 1- (1.10)-5 ] = $947.70
    ...

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