Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
8
Transcribed Image Text:The present worth of the pumping costs is determined to be
Expert Solution
Step 1
The today’s worth of dollar at a later date is the Present Value of the dollar. For example, the value of $ 100, 10 years later will not be same as today’s $100. We discount the $100 with the 10-year discount rate to bring it to its Present Value.
It is calculated as:
Where C denotes the amount,
r denotes the rate of interest,
n denotes the number of years
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