Determine the present worth in year 0 of the cash flows shown at an interest rate of 15% per year. Year 1 2 3 4 5 6 7 8 9 10 Cash flow, $1000 90 90 90 85 80 75 70 65 60 55
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We can do this using the formula: Present Worth = Cash Flow / (1 + Interest Rate)^n where n is the number of years in the future the cash flow occurs. For each cash flow, we can calculate the present worth as follows: Year 1: PW1 = 1000 / (1 + 0.15)^1 = 1000 / Show more…
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