00:01
Here we will calculate the present worth of cash flows for series 1.
00:08
We can have p equal to a1 times p by a where i with i percentage of comma n plus g of p by g comma i percentage and n.
00:21
So which is equal to here p represents the present value, p bar a represents present value, annuity factor, i percent is rate of interest, i is rate of interest, a1 first cash flow, g difference in consequent cash flows, n is number of periods, p by g present value factor for g.
01:16
From this we can have p1 equal to 1000 times p by a comma 6 percentage and 4 that is the duration plus 200 multiplied by p by g comma 6 percentage and 4 which is equal to 1000 multiplied by 3 .465 plus 200 multiplied by 4 .944 which is equal to 3465 plus 988 which is equal to 4453 dollars.
01:51
Then consider the series 2.
01:55
So here p2 is equal to 10000 divided by p by a comma 6 percentage 4 minus 500 times p by g comma 6 percentage comma 4 which is equal to 10000 multiplied by 2 .744 minus 500 multiplied by 3 .916 which is equal to 25482.
02:21
Therefore, the total present value p is equal to p1 plus p2 which is equal to 25482 plus 4453 which is equal to 29935 dollars.
02:38
Then second one future worth at year 12.
02:48
So future value equal to p times 1 plus r the whole power n.
02:52
Here fv represents the future value...