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Problem 2: What is the present worth value of the cash flow diagram shown in the following figure? 8% P- $10,000
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Answer #1

The objective of the following analysis is to observe the cash-flow diagram and compute the present worth of the cash flow.

It shall further be noted that the present worth of the cash flow is the worth of all the future cash flow, at year=0

The given diagram shows the cash-flow diagram along the time scale 0 to 5

The value of P = $10000 at year = 0 indicates the present value

There is no cash flow mentioned against year= 1 to 5

Hence, assume that there is no cash flow that took place in the year = 1 to 5

Thus, under the given circumstance, the present worth of the cash flow is $10000

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