Calculate the Present Worth (PW), Future Worth (FW), and Equivalent Uniform Annual Series value of cash...

Calculate the Present Worth (PW), Future Worth (FW), and Equivalent Uniform Annual Series value of cash flows below at an interest rate of 8% compounded annually.

End of Year	0	1	2	3	4	5
CF1	-$55,000	$12,000	$12,000	$12,000	$12,000	$12,000

Expert Solution

Present Worth:
Year	Cash Flows	Formula of DF	Discounting Factor(DF) @ 8%	Present Worth
0	-55000	1	1	(55,000.00)
1	12000	1/1.08^1	0.925925926	11,111.11
2	12000	1/1.08^2	0.85733882	10,288.07
3	12000	1/1.08^3	0.793832241	9,525.99
4	12000	1/1.08^4	0.735029853	8,820.36
5	12000	1/1.08^5	0.680583197	8,167.00

			Present Worth	(7,087.48)

.

Future Worth:
Year	Cash Flows	Formula of MF	Multiplying Factor (MF) @ 8%	Future Worth
0	-55000	1.08^5	1.469328077	(80,813.04)
1	12000	1.08^4	1.36048896	16,325.87
2	12000	1.08^3	1.259712	15,116.54
3	12000	1.08^2	1.1664	13,996.80
4	12000	1.08^1	1.08	12,960.00
5	12000	1	1	12,000.00

			Future Worth	(10,413.83)

.

Equivalent Uniform Annual Series value of cash flows:

= Present Worth/PVIFA(8%,5)

= -7087.48/3.9927

=-$1775.1094

=-$1775.11 (rounded off to two decimal places)

jeff jeffy answered 20 hours ago

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