Question



1.24 Construct a cash flow diagram to find the present worth in year 0 at an interest rate of 15% per year for the following situation. Year 0 1-4 bn Cash Flow, $ 19,000 +8,100
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Answer #1

Present worth of the cash flow stream = -19000 + 8100(P/A, 15%, 4)

= -19000 + 8100 x 2.8550

= $4,125.50

Diagram is shown below

A-$8.100 0 2 4 $19,000

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