4(a) For the cash flow diagram shown below, Calculate the value of Q. $50 $50 $5

Question

4(a) For the cash flow diagram shown below, Calculate the value of Q. $50 $50 $50 $50 50 $50 0 4 i-1290 4 (b). Investment in a crane is expected to produce profit from its rental of $15,000 the first year it is in service. The profit is expected to decrease by $2,500 each year thereafter. At the end of six years assume the salvage value is zero. At 12% interest the present worth of the profits is nearest to what? 4(c). Assume you borrowed $50,000 at an interest rate of 1 percent per month, to be repaid in uniform monthly payments for 30 years. In the 1631d payment, how much of it would be interest, and how much of it would be principal?

Explanation / Answer

Answer 4(b). Investment in a crane is expected to produce profit from its rental of $ 15,000 the first year it is in service. The profit is expected to decrease by $2,500 each year thereafter. At the end of six years assume the salvage value is zero. At 12% interest the present worth of the profits is nearest to what?

Following is the Cash Stream of Profits attached

1st year : $15000

2nd Year : $12500

3rd year :$10000

4th year : $7500

5th year : $5000

6th year :$2500

Assuming compounding and profits being released at the end of year

Present Worthe of Profits = ($15000)/(1.12)1 + (12500)/(1.12)2 + (10000)/(1.12)3 + (7500)/(1.12)4 + (5000)/(1.12)5 + (2500)/(1.12)6 =    13392.85 + 9964.92 + 7117.80 + 4766.38 + 2837.13 + 1266.57 = 39345.65

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.