Question

Its an economics engineering question

3. Determine the future worth at the end of year 10 of a cash flow series that starts 2 years from now at $125,000 and decreases by 8% per year. Use an interest rate of 8% per year. (20)

Answer 1

bil 10 Page To Find Future Wer th oth at the end of year. Civen: Interest Yale Year Ln 4 Cagh flow decreages every Amount A which Year of t,25,eeo 125 000 lro 0,000 flow gesies is given by Cash future worth of 1+ + 1,15,000 125 000 95c 15000 2 55000 C5000 +15000+. + 45000 1+ 1125000 1,25,000 ST ,05,000 L

Formula for FUTURE WORTH (FW) = $\sum$ Px[1+(r/100)]^{n ,}

^{here, P= cash flow amount,}

^{r = rate of inetrest}

^{n = no. of years for which cash flow is considered for Future worth.}