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The number of years from now that an initial investment of $1,000,000 would be recovered from...

Question:

The number of years from now that an initial investment of $1,000,000 would be recovered from uniform receipts of $131,000 per year beginning three years from now at an interest rate of 10% per year is nearest to:

A) 24

B) 29

C) 35

D) 40

Discounted Payback Period:

The number of years needed to recover the value of an initial investment is called the discounted payback period. It is similar to the payback, except that it uses discounted cash flows instead of regular cash flows.

Answer and Explanation: 1

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Let,

  • PV = present value = $1,000,000
  • PMT = periodic payment = $131,000
  • r = interest rate = 10%
  • n = discounted payback period (years)
  • m = number of...

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How to Find the Value of an Annuity

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Chapter 21 / Lesson 15
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An annuity is a type of savings account that pays back the investor in the future. Learn the formula used to calculate an annuity's value, and understand the importance of labeling specific numbers to calculate an output over time.


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