Question

Question 1 Determine the present worth of 5 equal annual deposits of $1,500 at the end of years 1 through 5, followed by 4 equal annual withdrawals of $800 at the end of years 4 through 7. Note that both years 4 and 5 will have a deposit and a withdrawal. Interest is 5%. $

Answer 1

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	Net Present Value	=	$          4,043.71
	Workings:
Year	Cash Inflow	Cash Outflow	Net Cash Flow	P.V Factor @ 5%	Present Value
	(i)	(ii)	(iii) = (i) + (ii)	(iv)	(iii) X (iv)
1	1500	0	1500	0.95238	$          1,428.57
2	1500	0	1500	0.90703	$          1,360.54
3	1500	0	1500	0.86384	$          1,295.76
4	1500	-800	700	0.82270	$             575.89
5	1500	-800	700	0.78353	$             548.47
6	0	-800	-800	0.74622	$            -596.97
7	0	-800	-800	0.71068	$            -568.55
			Net Present Value =		$          4,043.71