Question

Find the uniform annual worth in years 1 through 8 for the cash flows shown. Let i =9% per year. given that A1=80 and A2=200.

Year	0	1	2	3	4	5	6	7	8
Cash Flow, $	-	A1	50	70	90	A2	130	150	170

Answer 1

Ans. Present value of this cash flow at interest rate of 9%,
PV = 80/(1+0.09) + 50/(1+0.09)^2 + 70/(1+0.09)^3 + 90/(1+0.09)^4 + 200/(1+0.09)^5 + 130/(1+0.09)^6 + 150/(1+0.09)^7 + 170/(1+0.09)^8

=> PV = $608.16

For annual equivalent cash flow with present value $608.16, using formula for present value of annual equivalent cash flow (A), we get,

608.16 = A * [(1-1/(1+0.09)^8)/0.09]

=> A = $109.88
Thus, uniform annual worth = $109.88

* Please don’t forget to hit the thumbs up button, if you find the answer helpful.