A security company offers to provide CCTV coverage for a parking garage for ten years for an initial payment of $40,000 and additional payments of $25,000 per year. What is the equivalent annual annuity of this deal, given a cost of capital of 7%? A. - $30,695 B. - $21,487 C. - $18,417 D. - $24,556
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To calculate the present value of the additional payments, we can use the formula for the present value of an annuity: PV = PMT * (1 - (1 + r)^(-n)) / r Where PV is the present value, PMT is the annual payment, r is the discount rate, and n is the number of Show more…
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