Question

There are two possible twelve month investments, A and B. Their cash flows are described in the table below. Draw a fully labeled cash flow diagram for each showing all amounts individually (see Figure 3.5 as an example). Remember to show the units of time in your diagram. Note: Diagrams are not typically drawn to scale, but rather loosely proportional, i.e. amounts that twice as large should be associated with lines that are roughly about twice as long. Note: Proper diagrams also indicate the interest rate. For Investment A determine the Present Worth (PW) of the investment and for Investment B determine the Annual Worth (AW) of the investment. Payments Receipts Investment A Investment B $2,400 now and a closing fee of $200 $500 every two months, starting two at the end of month 12 months from now $250 monthly payment at the end of Receive $50 at the end of the first each month month, and from that point on, receive $50 more than the previous month at the end of each month 8.5% 9.25% Interest Rate

Answer 1

Atr 0.91533 318.05$ AW of nu- B = 0.91533 347$ Present worth (pad) of Inu A - 653.81 $ Annual worth (AW) of Inu - B = 347$.