equivalent annual cash flow


The required cash flow for the return on an annuity to be the same as the return of another investment. It is computed as

Equivalent annual cash flow = (a * discount rate) / ( 1 - (1+discount rate)-n)

where a= cash flow, n= number of periods.

Use this term in a sentence

The equivalent annual cash flow that the company had was extremely robust and this type of return made Henry want to invest even more.

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My boss insisted that he would receive an equivalent annual cash flow from his investment in municipal bonds over a comparable investment in stocks.

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The equivalent annual cash flow was a really interesting thing to me and it made me really upset and it scared me, cause i didn't know how it made a difference.

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