Calculate the Future worth, at year 7, of the following cash flow. Consider 6% annual interest rate,compounded semiannually.0200013000Interest Tables21000315004 5 6 7$2,0002500 3000ia = (1 + i)m − 1where İa = effective annual interest ratei = rate for one compounding periodm = number times interest is compounded per yeari = (1 + r / m)m – 1where i = effective interest rate for any time periodr = nominal rate for same time period as im = no. times interest is comp'd in period specified for i

The nominal rate of interest r=6% compounded semiannually Since interest is compounded semiannually…

Answered: Calculate the Future worth, at year 7,…

Calculate the Future worth, at year 7, of the following cash flow. Consider 6% annual interest rate, compounded semiannually. 0 2000 1 3000 2 1000 3 1500 4 $2,000 6 2500 3000 7

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cash Flow in Engineering Economics (Interest and Equivalence)

The cash flows of a firm are of two categories such as cash inflows and cash outflows. Cash inflow is the money or income entering a firm during a specific period whereas cash outflow is the money exiting a firm during a specific period in the form of the expenses incurred by the firm. In other words, we can say that cash flow is a series of expenses and credits that run over the project over the lifetime it existed whereas cash inflows are all the income and gains the company earns as a result of its operations.

Question

Calculate the Future worth, at year 7, of the following cash flow. Consider 6% annual interest rate,
compounded semiannually.
0
2000
1
3000
Interest Tables
2
1000
3
1500
4 5 6 7
$2,000
2500 3000
ia = (1 + i)m − 1
where İa = effective annual interest rate
i = rate for one compounding period
m = number times interest is compounded per year
i = (1 + r / m)m – 1
where i = effective interest rate for any time period
r = nominal rate for same time period as i
m = no. times interest is comp'd in period specified for i

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Step 1: Determine the given varables

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Step 2: Determine effective interest rate per year:

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Step 3: Determine the uniform cash flow for gradient series:

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Step 4: Determine the future worth:

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