Answered: The Present Worth of an Annuity is…

The Present Worth of an Annuity is period(s) to the of the first Annuity cash flow arrow a) one, right b) one, left c) two, right d) two, left

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

5th Edition

ISBN:9781305084766

Author:Saeed Moaveni

Publisher:Saeed Moaveni

Chapter20: Engineering Economics

Section: Chapter Questions

Problem 1P

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Question

The Present Worth of an Annuity is
period(s) to the
of the first Annuity cash flow arrow
a) one, right
b) one, left
c) two, right
d) two, left

Expert Solution

Step 1

The present worth of annuity is the present value of the sum which is needed today for future annuity payments. On cash flow diagram this value comes to the left of the first annuity cash flow arrow.

Step 2

The cash flow diagram is shown below:

The present worth of annuity is one period to the left of the first annuity cash flow arrow.

Step by step

Solved in 3 steps with 1 images

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