Question

pw aw

EOY MARR = PW = AW = FW = IRR = ERR = 0.12 $68,958.38 $12,204.54 $214,174.27 34.22% 22.14% CF -$50,000 $15,084 $15,084 $15,084 $15,084 $15,084 $30,000 $30,000 $30,000 $30,000 $40,000

Answer 1

Ans ) PW is the present worth which is the present value of cash inflows - initial investment. and calculated as follows:

EOY Cash flows PV factor or MARR 12 % is the disount factor values of discount factors is calculated by 1/(1+r)^n by putting n = 1,2,3,4,5,6,7,8,9, 10 1/(1+0.12) = 0.892857

1/(1.12)^2 = 0.797193

1/(1.12)^3 = 0.71178

1/(1.12)^4 =0.635518

1/(1.12)^5 = 0.56742

1/(1.12)^6 = 0.50663

1/(1.12)^7 = 0.45234

1/(1.12)^8 = 0.404

1/(1.12)^9= 0.360610

1/(1.12)^10 = 0.3219

0 -50000 (intial investment outflow) PV factor 12% values as above inflow * Marr (Present value )

1 15084 0.8928571429   13467.857   

2 15084 0.7971938776 12024.8724

3 15084 0.7117802478 10736.493   

4 15084 0.635518078 9586.1546

5 15084 0.567426855 8559.0666

6 30000 0.5066311212 15198.933

7 30000 0.452349215 13570.476

8 30000 0.403883228 12116.4968

9 30000 0.360610025 10818.3007

10 40000 0.3219732366 12878.929

Present value of inflows = 118957.5791

Present worth = Present value of inflows - initial investment  

=118957.5791-50000 =68957.5791

= 68958 rounded off.