Given this cash flow sequence on the follow table with interest rate of 10 % per
ID: 1168133 • Letter: G
Question
Given this cash flow sequence on the follow table with interest rate of 10 % per year
Year
Income, $ per year
Expenses, $ per year
0
20,000,000
1-5
8,000,000
1,000,000
6-8
9,000,000
2,000,000
Calculate the present value of the whole cash flow sequence
Calculate the Future worth/value of both series (1-5) and (6-8)
Calculate the annual worth in years 1 to 8 of the following series of incomes and expenses.
Year
Income, $ per year
Expenses, $ per year
0
20,000,000
1-5
8,000,000
1,000,000
6-8
9,000,000
2,000,000
Explanation / Answer
(a) Consider the following table:
Where PV of whole cash flow sequence = sum of Present worth of net cash flow
Present worth of net cash flow = Net Flow Pv factor at 10% of respective year.
(b) Future value has been calculated in the following table:
(c) Annual worth is given below:
All values are present in dollar terms.
Year Cash inflow Cash outflow Net flow(inflow-outflow) Pv factor at 10% Present worth of net cash flow 0 20,000,000 0 20,000,000 1 20000000 1 8,000,000 1,000,000 7,000,000 0.9091 6363700 2 8,000,000 1,000,000 7,000,000 0.8264 5784800 3 8,000,000 1,000,000 7,000,000 0.7513 5259100 4 8,000,000 1,000,000 7,000,000 0.683 4781000 5 8,000,000 1,000,000 7,000,000 0.6209 4346300 6 9,000,000 2,000,000 7,000,000 0.5645 3951500 7 9,000,000 2,000,000 7,000,000 0.5132 3592400 8 9,000,000 2,000,000 7,000,000 0.4665 3265500 PV of whole cash flow sequence 57344300Related Questions
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