Question

You wish to invest in equipment for your business. This investment will generate a revenue stream...

You wish to invest in equipment for your business. This investment will generate a revenue stream of $20,000 per year for the next 3 years. After year 3, you can salvage the equipment for $15,000. The required return is 10% compounded annually. Calculate the duration.

2.13

2.23

2.41

2.52

None of the Above
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Answer #1

Solution:

The Duration of the investment is 2.13 years.

Thus the solution is option 1 = 2.13

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

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