Homework Answers
ANSWER:
I = 15%
FW = Cash flow in year 0(f/p,i,n) + Cash flow in year 1(f/p,i,n) + Cash flow in year 2(f/p,i,n) + Cash flow in year 3(f/p,i,n) + Cash flow in year 4(f/p,i,n) + Cash flow in year 5(f/p,i,n)
fw = -69,000(f/p,15%,5) + 29,800(f/p,15%,4) + 30,800(f/p,15%,3) + 21,400(f/p,15%,2) + 21,400(f/p,15%,1) + 24,000(f/p,15%,0)
fw = -69,000 * 2.0114 + 29,800 * 1.749 + 30,800 * 1.5209 + 21,400 * 1.3225 + 21,400 * 1.15 + 24,000 * 1
fw = -138,787 + 52,120.2 + 46,843.72 + 28,301.5 + 24,610 + 24,000
fw = 37,088.82
so the future worth is $37,088.82
investment is acceptable as fw is positive.
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