What Amount Invested Today Will Provide Yearly Payments of $50,000

question 150

Short Answer

What amount invested today will provide yearly payments of $50,000 for 20 years starting 10 years from now if invested at 5.5% compounded annually?

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Definitions:

Internal Rate Of Return

A financial metric used to estimate the profitability of potential investments, calculated as the rate that makes the net present value of all cash flows from a particular project equal to zero.

Net Present Value

A calculation of the present value of cash inflows minus the present value of cash outflows over a period of time, used in capital budgeting.

Salvage Value

Salvage value is the estimated resale or scrap value of an asset at the end of its useful life.

Capital Budgeting

The process by which a business evaluates and selects long-term investments that are likely to add value to the company.