Professional Documents
Culture Documents
NO.1
BISA, MISHAEL KARLITO V.
ME-5301
PROBLEM NO. 7
What is the present worth of two $100 payments at the end of the third and fourth years if the annual interest
rate is 8%?
Given:
:Investment of $100,000 now and $100,000 at the end of year 1
:Revenues at the of end of years 1 and 2 of $150,000
:Annual interest of 10%; i=0.10%
Required: Present value, P
Solution:
Cash Flow Diagram:
USING
FORMULA:
where: P is the present value, F is the future value, i is the interest rate and n is the
compounding period