What Is the Equal Annual Annuity for Scorch & Burn

question 15

Multiple Choice

What is the equal annual annuity for Scorch & Burn Fire Extinguishers if their cost of capital is 8% and the initial investment is $75,000 (rounded) ? $$\begin{array} { | l | l | } \hline \text { Year } & \text { Cash Inflows } \\\hline 1 & \$ 25,000 \\\hline 2 & \$ 25,000 \\\hline 3 & \$ 45,000 \\\hline\end{array}$$

• A) $5,304
• B) $6,271
• C) $2,058
• D) $4,157

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