Question

Calculate the future worth of the purchase shown below using an interest rate of 9% per year.

First Cost: -$20,000

Operating Cost: -$3,000/YR

Salvage Value: $4,000

Useful Life: 6 Years

Answer #1

We can convert given cash flow into future value using two formula

Method 1. Convert the cash flow into present value then convert it to future value.

Now convert it to future value

FW = - 31,072.69 × 1.09^{6}
= - $ **52,112.01**

Method 2. Calculating the future value

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Compute the future worth of alternative P shown
below, using an interest rate of 8% per year using LCM method
P
Q
First cost, $
-23,000
-30,000
Annual operating cost, $ per year
-4,000
-2,500
Salvage value, $
3,000
1,000
Life, years
3
6

What is the net present worth using an interest rate of 8.5%
over 8 years from operating equipment that upfront costs 40,000, a
salvage value of 4,000 at the end of the 4-year useful life
assuming repeatability with the revenues and cost values given
below?
1
2
3
4
5
6
7
8
Revenue
16,000
21,000
21,000
24,000
22,000
20,000
15,500
10,500
Operating Cost
4,500
5,500
6,000
7,200
4,500
5,500
6,000
7,200

A certain machine has the estimates shown below:
Machine
First
Cost ($)
-20,000
Annual
operating cost ($/ year)
-10,000
Salvage
value ($)
4,000
Life
(years)
10
At an interest rate of 10% per year, the annual worth of this
machine is equal to:
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-$12,658
-$15,270

Using Interest Factor Table
Ali invested $300,000 in a small project for an interest rate
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total amount of money he is going to receive after 12 years of his
investment period?
Compressor that has the following costs are under consideration
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year. Calculate...

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series?
cash flow for yr 0 is $0, for yr 1 is $0, for yr 2 is $800, for
yr 3 is $600, for yr 4 is $400, for...

(3)
Calculate the future value of $3,000 in
a. 5 years at an interest rate of 5% per
year.
b. 10 years at an interest rate of 5% per
year.
c. 5 years at an interest rate of 10% per
year.
d. Why is the amount of interest earned in part
(a) less than half the amount of interest earned
in part
(b)?
a. Calculate the future value of $3,000 in 5
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year 0 1 2 3 4 5 6 7 8 9 10
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Using Microsoft Excel:
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Year
1
2
3
4
5
Cost
$1100...

You have been asked to recommend one of the following power
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Solar
Conventional
First Cost $
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-12,000
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Replace Cells in year 4
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0
Replace cells in year 5
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