Question

Example: Series and Random Amounts An engineering consultant company in Ayer Keroh that owns a sizable amount of land plans to lease the machineries to a company. The contract calls for the company to pay RM 20,000 per year for 10 years beginning 3 years from now (i.e., beginning at the end of year 3 and continuing through year 12) plus $10,000 three years from now and RM 15,000 eight years from now. Utilize engineering economy relations to analyse the five equivalent values listed below at 10% per year. 1. Total present worth Pin year 0 2. Future worth Fin year 22 3. Annual series over all 22 years 4. Annual series over the first 10 years 5. Annual series over the last 12 years

Answer 1

1. Present worth = 20000 * (P/A, 10%,10)*(P/F,10%,2) + 10000 * (P/F,10%,3) + 15000 * (P/F,10%,8)

= 20000 * 6.144567*0.826446 + 10000 *0.751315 + 15000 *0.466507

= 116073.81

2. Future worth = 116073.81 *(F/P, 10%,22) = 116073.81 * 8.140275 = 944872.74

3. Annual series over 22 yrs = 116073.81 * (A/P, 10%,22) = 116073.81 * 0.114005 = 13233.00

4. Annual series over first 10 yrs = 116073.81 * (A/P, 10%,10) = 116073.81 * 0.162745 = 18890.48

5. Annual series over last 12 yrs = 944872.74 * (A/F, 10%,12) = 944872.74 *0.046763 = 44185.38