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A project costing $218,000 has equal annual cash inflows over its 7-year life. If the discounted payback period is seven years and the discount rate is zero percent, what is the amount of the cash flow in each of the seven years

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Answer:

The annual cash-flow is $31,142.857

Explanation:

Giving the following information:

A project costing $218,000 has equal annual cash inflows over its 7-year life.

The fact that the discount rate is cero means that the value of money doesn't vary with time. The payback period indicates that the sum of the cash flows equals the initial investment.

Cash flow= 218,000/7= $31,142.857

The annual cash-flow is $31,142.857

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