Answer:
The minimum value is $196,362.95
Explanation:
Giving the following information:
Cash flow= $20,000
The number of years= 20 years
Interest rate= 8%
First, we need to calculate the future value of the cash flows. We will use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= cash flow
FV= {20,000*[(1.08^20)-1]} /0.08
FV= $915,239.29
Now, we can calculate the present value. The present value is the minimum value yo accept.
PV= FV/(1+i)^n
PV= 915,239.29/ 1.08^20
PV= $196,362.95
