Question

1a) (13pts) For the cash flows below, determine the amount in year I, if the funure worth interest rate is 7.770618763% per year compounded quarterly in year 9 is $6.000 and the Year Cost,S1000 A 4 : A-75 7 8 |A-1951A-225 A-15 45 . A-105 A-1351 A-165 Ib) (12pts) Compute the equivalent uniform A value for years 1 through 8. given varying interest rates as shown in the cash flow diagram. i = 14% +--i = 10%- 6 Year 100 -100 -100 100-100 -160 -160 -160

Answer 1

1.
rate compounded annually=(1+7.770618763%/4)^4-1=8%

A*1.08^8+(A-15)*1.08^7+(A-45)*1.08^6+(A-75)*1.08^5+(A-105)*1.08^4+(A-135)*1.08^3+(A-165)*1.08^2+(A-195)*1.08+A-225=6000

=>A=572.4325659

2.
=(100/1.14+100/1.14^2+100/1.14^3+100/1.14^4+100/1.14^5+160/1.14^5*1/1.1+160/1.14^5*1/1.1^2+160/1.14^5*1/1.1^3)/(1/0.14*(1-1/1.14^5)+1/1.14^5*1/0.1*(1-1/1.1^3))
=116.4023127