A certain end of year cash flows are expected to be P 7,000.00 at the end of the 3rd year, P 9,000.00 at the end of the 4th year, P 11,000.00 at the end of the 5thyear, and P 13,000.00 at the end of the 6th year. Using 15% interest per year, determine the equivalent a. present worth at the beginning of the first year and b. uniform annual worth at the end of each year of the 6 years.ANS. P 20,837.60, AND P 5,506.06 3. A certain end of year cash flows are expected to be P 7,000.00 at the end of the3rd year, P 9,000.00 at the end of the 4th year, P 11,000.00 at the end of the 5thyear, and P 13,000.00 at the end of the 6th year. Using 15% interest per year,determine the equivalent a. present worth at the beginning of the first year and b.uniform annual worth at the end of each year of the 6 years.ANS. P 20,837.60, AND P 5,506.06

Net Present Value: It is the present worth of the annual cash flows and the initial cost of the…

Answered: determine the equivalent a. present…

determine the equivalent a. present worth at the beginning of the first year and b. uniform annual worth at the end of each year of the 6 years.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 29P

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

A certain end of year cash flows are expected to be P 7,000.00 at the end of the 3 rd year, P 9,000.00 at the end of the 4th year, P 11,000.00 at the end of the 5th year, and P 13,000.00 at the end of the 6th year. Using 15% interest per year, determine the equivalent a. present worth at the beginning of the first year and b. uniform annual worth at the end of each year of the 6 years. ANS. P 20,837.60, AND P 5,506.06

3. A certain end of year cash flows are expected to be P 7,000.00 at the end of the
3rd year, P 9,000.00 at the end of the 4th year, P 11,000.00 at the end of the 5th
year, and P 13,000.00 at the end of the 6th year. Using 15% interest per year,
determine the equivalent a. present worth at the beginning of the first year and b.
uniform annual worth at the end of each year of the 6 years.
ANS. P 20,837.60, AND P 5,506.06

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