You took out a loan to buy a new car. The monthly interest rate on the loanis 2.5% . You haveto pay S260 every month for 60 months.What is the present value of the cash flows if it's an annuity due?What is the future value of the cash flows if it's an annuity due?

You took out a loan to buy a new car. The monthly interest rate on the loanis 2.5% . You haveto pay S260 every month for 60 months.What is the present value of the cash flows if it's an annuity due?What is the future value of the cash flows if it's an annuity due?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

You took out a loan to buy a new car. The monthly interest rate on the loan
is 2.5% . You have
to pay S260 every month for 60 months.
What is the present value of the cash flows if it's an annuity due?
What is the future value of the cash flows if it's an annuity due?

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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