Problem 04.062 Varying Interest Rates For the cash flows shown, determine the future worth in year...

Question

Question

Problem 04.062 Varying Interest Rates For the cash flows shown, determine the future worth in year 5. Year 0 1-4 Estimated i

Answer 1

Answer #1

In this case, future worth at the end 5th year is given by

FW=[5000*(F/P,0.14,4)+6000*(F/A,0.14,4)]*(F/P,0.09,1)+9000

Let us calculate the interest factors

(F/P,0.14,4)=(1+0.14)^4=1.688960

(F/P,0.09,1)=(1+0.09)^1=1.090000

(1 + i) - 1 (F/A, i,n)=

(F/A, 0.14, 4) = (1 + 0.144 - 1 -= 4.921144 0.14

FW=(5000*1.688960+6000*4.921144)*1.090000+9000=$50389.11

Answer 2

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