1. Find the Present Worth (PW), the Future Worth (FW), the Annual Worth (AW), and the simple payback period of the following cash flow at a Minimum Attractive Rate of Return (MARR) of 10%: Year 0 – spend $50,000; Years 1 through 6 make $12,000, and in Year 6 sell all of the left-over stuff for an additional $5,000. Do not forget you can always use FW PW(F/P,i,n) and AW = PW(A/P,i,n). Also do not forget that if one is positive then they all are positive or if one is negative then they all are negative. Answer: PW = $5,085, payback = 5 years 2. Is the project in #1 a good project? Answer: What do the "goodness" indicators show (PW, FW, AW) > 0, payback period OK? 3. If MARR in problem #1 is 15% what is the PW and is this a good project? Answer: Has PW (and also FW and AW) etc. changed sign

(Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: @ End of Year 1 W 5 2 3 4 12 5 s damaged 30 6 X 7 8 3 a. What is the present value of investment A at an annual discount rate of 21 percent? $(Round to the nearest cent.) b. What is the present value of investment B at an annual discount rate of 21 percent? $(Round to the nearest cent.) c. What is the present value of investment C at an annual discount rate of 21 percent? (Round to the nearest cent.) 80 F3 E A $11,000 11,000 11,000 11,000 11,000 D C $ 4 DDD DOD F4 R Investment B F 1 $11,000 11,000 11,000 11,000 % 5 V is FS T G A 6 C $16,000 B 48,000 MacBook Air F6 Y & 7 H 44 F7 U N * CO 8 J DII FA 1 ( M 9 K MOSISO 19 O 1 0 V I 4 F10 11 P > command 4 ● FII + B = { [ I Next F12 .. ? option

Answer the question correctly. 7.

Find the present worth at time 0 of the chrome plating costs shown in the cash flow diagram. Assume i = 10% per year.