Question

7. The future worth of a project with initial cost P, a negative annual cash flows of A, a salvage value of S, an interest rate of i over a life of N years can be calculated using: (a) Fw :-P(F/P, i%, n) + A(F/A, i 96, n) + S(F/P, i%, n) (b) Fw PE/P, i%, n)-A(F/A, i%, n) +S (c) FW -P(F/P, i%, n)-A(F/P, i%, n) + S (d) Fw -P(P/F, i%, n) + A(F/A, i%, n)-AP/A, i%, n)) + Si (e) Fw -P(F/P, i%, n) + A(F/A, i%, n)+5

Answer 1

Answer
Option C
The future worth of initial cost is given by the
-P(F|P,i,n)
the future value of negative cash flow is given by
-A(F|A,i,n)
the future value of salvage value is same
=S
so the total worth is
FW=-P(F|P,i,n)-A(F|A,i,n)+S