Question

The XYZ Company loaned some money to one of its vendors so the vendor could upgrade its supply chain. In return, the vendor has agreed to pay XYZ $59,726 a year, with the first payment occurring at the end of year 6.The vendor will make a total of 12 payments to XYZ (one per year). What is the annual worth of this loan? Use a MARR of 3% to make the calculation.

Hint: Count the years carefully. Calculate the annual worth for the entire cash flow (from year 0 to the year of the last payment).

Enter your answer as follows: 12345

Round your answer. Do not use a dollar sign ("$"), any commas (","), or a decimal point (".").

Answer 1

Annual worth of vendor payments = 59726 * (P/A, 3%,12)*(P/F, 3%,5) * (A/P, 3%,17)

= 59726 * 9.954004 *0.862609 * 0.075953

= 38950.88 ~ 38951 (Nearest Dollar)