Question

A major electronics manufacturer expects to generate additional revenue from its recently won government contract. The company forecasts that the revenue will be $190 million in the first year, but will increase by $2 million every year for the next 3 years. What is the present worth of total revenue at an interest rate of 18% per year?

Answer 1

i = 18%

n = 3

The present worth of the total revenue would be:-

190000000*(P/A,18%,3) + 2000000*(P/G,18%,3)

190000000*2.174273+2000000*1.935446

= 45182078