Question

For the below Cash Flow find PW using 10% interest rate.

years	$ cost
0	4,888
1	-
2	-
3	3,000.00
4	3,100.00
5	3,200.00
6	3,300.00
7	3,400.00
8	3,500.00

Answer 1

Interest rate = 10%

Present worth is calculated as: [Cost / (1 + Interest Rate)^^Year]

Year	Cost	Present Worth	Rough work to calculate present worth
0	4,888	4,888.00	[4,888 / 1.1^1]
1	-	-
2	-	-
3	3,000	2,253.94	[3,000 / 1.1^3]
4	3,100	2,117.34	[3,100 / 1.1^4]
5	3,200	1,986.95	[3,200 / 1.1^5]
6	3,300	1,862.76	[3,300 / 1.1^6]
7	3,400	1,744.74	[3,400 / 1.1^7]
8	3,500	1,632.78	[3,500 / 1.1^8]
		16,486.51

Present worth of given series is 16,486.51