An asset is purchased for P120,000.  It is expected to provide an additional P28,000 of annual net cash inflows.  The asset has a 10-year life and an expected salvage value of P12,000.  The hurdle rate is 10%.  The present value of an annuity factor of 10% for 10 years is 6.1446 and the present value of P1, discounted for 10 years at 10% is 0.3855.  Given the data provided, the minimum amount of annual cash inflows that would provide the 10% time-adjusted return is approximately (Please show the formula and solution) c.  P 24,400 b.  P 26,600 a.  P 18,776 d. P22,535

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.