Question

You put the poetry book down and think to yourself "ever since I inherited $1.3M, I can do things like read poems." You don't know what the poem means but whatever. You decide to use all your money to make more money. You value money at 10% per year unless stated otherwise. You look back at your notebook of things to do with money and decide: 1. Operating cost for Diamond Sutra Publishing in Present Worth for the next 8 years is: Diamond Sutra Publishing of Changsha: Projected Publishing Costs [in $K] 400 350 350 350 300 300 250 250 200 150 150 100 100 50 50 50 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1€
we have to find the Present Value for operating cost over the next 8 years. We value $ at 10% per year, so it appreciates at 10% per year.

Answer 1

1
	Years	8
	Cost of Capital	10% p.a
				(Amount in $k)
	Year	Operating Cost (a)	PVF @ 10% p.a. (b =1/(1.1^year))	Present Worth (a*b)
	0		1	$                            -
	1	$                         50.00	0.9091	$                     45.45
	2	$                         50.00	0.8264	$                     41.32
	3	$                       100.00	0.7513	$                     75.13
	4	$                       150.00	0.6830	$                   102.45
	5	$                       350.00	0.6209	$                   217.32
	6	$                       250.00	0.5645	$                   141.12
	7	$                       300.00	0.5132	$                   153.95
	8	$                       350.00	0.4665	$                   163.28
	Total	$                   1,600.00		$                   940.03
	Operating Cost for Diamond Sultra Publishing in Present Worth for the next 8 years is	$                   940.03	k