Question

*Note: You should form cash flow diagrams and use excel functions to solve following questions. You should upload your excel files on blackboard and attach the hard copy of them to your HW. Q1: The present worth of the cash flow shown below at į= 10% is? 8 show the formula in excel step by step P ? 0 1 2 3 456 7 A $13,000 Q2: An engineering company in Wyoming that owns 50 hectares of valuable land has decided to lease the mineral rights to a mining company. The primary objective is to obtain long-term income to finance ongoing projects 6 and 16 years from the present time. The engineering company makes a proposal to the mining company that it pay $30,000 per year for 20 years beginning 1 year from now, plus $15,000 six years from now and $25,000 sixteen years from now. If the mining company wants to pay off its lease immediately, how much should it pay now if the investment is to make 6% per year? Show the cash flow diagram, solve it in Excel, upload your

Answer 1

(Q1)

Present worth is computed as follows. Note that PV Factor in year N = (1.10)^-N.

Year	Cash Flow	PV Factor @10%	Discounted Cash Flow
	(A)	(B)	(A) x (B)
0	0	1.0000	0
1	0	0.9091	0
2	13,000	0.8264	10,743.80
3	13,000	0.7513	9,767.09
4	13,000	0.6830	8,879.17
5	13,000	0.6209	8,071.98
6	13,000	0.5645	7,338.16
7	13,000	0.5132	6,671.06
		Present Worth =	51,471.26

Formula screenshot:

NOTE: As HOMEWORKLIB Answering Policy, 1st question has been answered.