The cash flow associated with a strip mining operation is expected to be P 2M in year 1, P 1.8M in year 2 and amounts decreasing by P 200k per year through 8. At an interest rate of 15% per year, the equivalent annual cash flow is nearest to:

The cash flow associated with a strip mining operation is expected to be P 2M in year 1, P 1.8M in year 2 and amounts decreasing by P 200k per year through 8. At an interest rate of 15% per year, the equivalent annual cash flow is nearest to:

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

The cash flow associated with a strip mining operation is expected to be P 2M in
year 1, P 1.8M in year 2 and amounts decreasing by P 200k per year through 8. At
an interest rate of 15% per year, the equivalent annual cash flow is nearest to:
P 1,433,845
P1,492,139
P 1,417,371
P1,443,734

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