Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 3, Problem 51P
To determine

Calculate the present worth.

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Suppose you want to withdraw $30,000 at the end of year 3 and another $30,000 at the end of year 5. The account’s interest rate is 5% compounded annually. a) how much should you deposit now? b) Suppose you realize you can only deposit $20,000 today, but you expect to have more funds available in 1 year. How much must you deposit into the account at the end of year 1 so that you can still make the necessary withdrawals at the end of year 3 and 5? answer a and b
A cash flow at time zero (now) of $7,386 is equivalent to another cash flow that is an EOY annuity of $2,100 over five years (starting at year 1). Each of these two cash-flow series is equivalent to a third series, which is a uniform gradient series. What is the value of G for this third series over the same five-year time interval? Assume that the cash flow at the end of year one is zero. Choose the correct answer below. A. $1,050 B. $702 OC. $949 OD. $1,195 OE. Not enough information given.
How much should I deposit in a trust now (time zero) if it has to yield $100,000 at time zero, $25,000 in years 1 through 5, $50,000 per year from year 6 in perpetuity. Interest rate is 5%. Verify your answers using excel. Hint: Perpetuity means your principal stays the same, you are just generating interest which you withdraw. How much money should you have at the end of year 5 so that you generate 50,000 per year interest?
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