Question

3.12What is the present worth of these future payments? (a) $25,500 eight years from now at 12% compounded annually. (b) $58,000 twelve years from now at 4% compounded annually. (c) $25,000 nine years from now at 6% compounded annually. (d) $35,000 four years from now at 9% compounded annually.

Park Chan S.. Contemporary Engineering Economics (2-downloads) (p. 122). Pearson Education. Kindle Edition.

Answer 1

Part a) Present worth = Future payment/[(1+r)^n] = 25500/[(1+0.12)^8] = 25500/[1.12^8] = 25500/2.4759632 = $10,299.02

Part b) Present worth = Future payment/[(1+r)^n] = 58000/[(1+0.04)^12] = 58000/[1.04^12] = 58000/1.60103222 = $36,226.63

Part c) Present worth = Future payment/[(1+r)^n] = 25000/[(1+0.06)^9] = 25000/[1.06^9] = 25000/1.689478959 = $14,797.46

Part d) Present worth = Future payment/[(1+r)^n] = 35000/[(1+0.09)^4] = 35000/[1.09^4] = 35000/1.41158161 = $24,794.88

Alternatively using excel: