Homework Answers
| CALCLATION OF PRESENT WORHT OF THE INVESTMENT | ||||||
| Year | Cash Flow (a) | PVF OF 1 $ @ 15% (b) | Present Value (axb) | |||
| 1 | $ 8,000 | 0.8696 | $ 6,956.52 | |||
| 2 | $ 7,000 | 0.7561 | $ 5,293.01 | |||
| 3 | $ 6,000 | 0.6575 | $ 3,945.10 | |||
| 4 | $ 5,000 | 0.5718 | $ 2,858.77 | |||
| Total | 2.8550 | $ 19,053.39 | ||||
| Answer = Present Value of the investment = | $ 19,053.39 | |||||
| Equivalent Annual Worth = Net Present Value of the investment / Total of PVF of $ 1 @ 15% | ||||||
| Equivalent Annual Worth = $ 19,053.39 / 2.855 = $ 6,673.74 | ||||||
| Answer = | $ 6, 673.74 | |||||
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