What is the most it should pay for that opportunity

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Question - Review the following cases and apply Present value and future value of an annuity and Present value and future value of mixed income.

Present value and future value of an annuity

Fran Abrams wants to determine how much money she will have after 5 years if she chooses Annuity A, that is, the ordinary annuity. She will deposit $ 1,000 annually, at the end of each of the next 5 years, into a savings account that pays 7% annual interest.

Present value and future value of mixed income

Frey Company, a shoe factory, has the opportunity to receive the following mixed income of cash flows for the next 5 years:

End of Year

Cash Flow

1

$400.00

2

$800.00

3

$500.00

4

$400.00

5

$300.00

If the company must earn at least 9% on its investments, what is the most it should pay for that opportunity?

Reference no: EM132756798

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