GENENG 2820 Fall 2017 HOMEWORK ASSIGNMENT 4 Due Date: 10/26/2017. Instructions:

Question

GENENG 2820 Fall 2017 HOMEWORK ASSIGNMENT 4 Due Date: 10/26/2017. Instructions: 1 Please write legibly and highlight your final answer. 2. Draw a cash flow diagram wherever possible 3. Solve the problems sequentially and use a cover sheet that is provided on D2L 4 Solve the problems on engineering paper or 8% x ll paper with no tattered edges. Problem General Motors have developed an advanced light combat vehicle (ALCV) that will reduce the injuries to military personnel amounting to $1 Smillion three years from now. Determine the present worth(P) of these benefits at an interest rate of 10% per year compounded semiannually

Explanation / Answer

Here Future Value of injuries worth = $ 15 million

Number of years in between = 3 years

Interest Rate = 10% = 0.1

Semiannually rate = 0.05

so total payments = 3 * 2= 6 periods

Net Present Value

NPV = Future Value * (1 + r/100)6

NPV = $ 15 * (1 + 5/100)-6  Million

NPV = 15 /1.3401

NPV = $ 11.1932 million

Net present value = $ 11.1932 million

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