Question

The XYZ Company loaned some money to one of its vendors so the vendor could upgrade its supply chain. In return, the vendor has agreed to pay XYZ $59107 a year, with the first payment occurring at the end of year 6.The vendor will make a total of 13 payments to XYZ (one per year). What is the annual worth of this loan? Use a MARR of 4% to make the calculation.

Hint: Count the years carefully. Calculate the annual worth for the entire cash flow (from year 0 to the year of the last payment).

Enter your answer as follows: 12345

Round your answer. Do not use a dollar sign ("$"), any commas (","), or a decimal point (".").

Answer 1

Present value of annual payment from Year 10 to Year 23	Using present value function in MS excel	pv(rate,nper,pmt,fv,type) rate = 4% nper =14 pmt = -57076 fv =0type =0	PV(4%,14,-57076,0,0)	$602,900.80
present value of loan	present value at year 10/(1+r)^n	602900.8/(1.04)^9	423590.1
Annual worth	present value of machine/present value annuity factor	423590.1/14.8568	28511.53
PRESENT VALUE ANNUITY FACTOR	Using present value function in excel	pv(rate,nper,pmt,fv,type) rate = 4% nper =14 pmt = 1 fv =0 type=0	PV(4%,23,-1,0,0)	14.85684167
Annual worth		28512