Question

8. Henry Mueller Supply Co. sells tamperproof, normally open thermostats (i.e., thermostat closes as temperature rises). Annual cash flows are shown in the table below. Determine the future worth of the net cash flows at an interest rate of 12% per year.

Answer 1

Answer:

Future worth of net cash flow = F/A, 12%, 8 years * ( Cash inflow - Cash outflow

Future worth of net cash flow = 12.3 * ( 200 - 90 ) = 12.3 * 110 = 1353

Thus net future worth of cash flow is $1353k