1. What is the present worth of the following series of incomeand disbursements

Question

1. What is the present worth of the following series of incomeand disbursements if the intrest rate is 6% per year? Year               Income                  Expenses 0                      10,000                    7500 1-5                   1,200                      400 6-9                    900                        800 1. What is the present worth of the following series of incomeand disbursements if the intrest rate is 6% per year? Year               Income                  Expenses 0                      10,000                    7500 1-5                   1,200                      400 6-9                    900                        800

Explanation / Answer

Year

Cash flow

Present Worth

(Income - Expenses)

0

[$10,000 - $7,500] / (1+0.06)0

1

[$1,200 - $400] / (1+0.06)1

2

[$1,200 - $400] / (1+0.06)2

3

[$1,200 - $400] / (1+0.06)3

4

[$1,200 - $400] / (1+0.06)4

5

[$1,200 - $400] / (1+0.06)5

6

[$900 - $800] / (1+0.06)6

7

[$900 - $800] / (1+0.06)7

8

[$900 - $800] / (1+0.06)8

9

[$900 - $800] / (1+0.06)9

Year

Cash flow

Present Worth

(Income - Expenses)

0

[$10,000 - $7,500] / (1+0.06)0

$2,500.00

1

[$1,200 - $400] / (1+0.06)1

$754.71

2

[$1,200 - $400] / (1+0.06)2

$711.99

3

[$1,200 - $400] / (1+0.06)3

$671.69

4

[$1,200 - $400] / (1+0.06)4

$633.71

5

[$1,200 - $400] / (1+0.06)5

$597.84

6

[$900 - $800] / (1+0.06)6

$70.50

7

[$900 - $800] / (1+0.06)7

$66.51

8

[$900 - $800] / (1+0.06)8

$62.74

9

[$900 - $800] / (1+0.06)9

$59.20 Present Worth $6,128.89

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