SHOW ALL WORK WITH TABLE AND CASH FLOW DIAGRAM What is the annual worth of this

Question

SHOW ALL WORK WITH TABLE AND CASH FLOW DIAGRAM

What is the annual worth of this investment?

$0.68

   Jupiter is considering investing time and administrative expense on an effort that promises one large payoff in the future, followed by additional expenses over a 10-year horizon. The cash flow profile is shown in the table below. Jupiter's MARR is 12 percent/year.   EOY     Cash Flow (K$)     0     $2     1     $10     2     $12     3     $14     4     $16     5     $18     6     $200     7     $10     8     $12     9     $14     10     $100   a.  

What is the annual worth of this investment?

$0.68

Explanation / Answer

Present Value = cash Flows(PVAF, Rate * Years) Present Value = -2-10/(1.12)-12/(1.12)2-14/(1.12)3-16/(1.12)4-18/(1.12)5+200/(1.12)6-10/(1.12)7-12/(1.12)8-14/(1.12)9-100/(1.12)10 Present Value = -2-10*.893-12*.797-14*.711-16*.636-18*.567+200*.506-10/.452-12*.403-14*.361-100*.322 Present Value = -2-8.93-9.564-9.954-10.176-10.206+101.2-4.52-4.836-5.504-32.2 Present value = $ 3.31

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