Homework Answers
ANSWER:
I HAVE SOLVED THIS IN AN EXCEL AS PER YOUR REQUEST.
year 0 1 2 3 4 5
initial investment -499,000
annual expense -45000 -54900 -64800 -74700 -84600
annual revenues 199,000 199,000 199,000 199,000 199,000
cash flows -499,000 154,000 144,100 134,200 124,300 114,400
present worth -1,359.9
annual worth ($372.58)
As you can see cash flows are formed by subtracting annual expense from annual revenues and cash flow for year zero will be equal to initial investment.
present worth is calculated by using =npv formula which is =npv(rate,cash flows from year 1 to 5) + cash flow in year zero.
annual worth is calculated by using =-pmt formula which is =-pmt(rate,nper,pv,fv,type)
rate = 11.5% , nper = 5 years , pv = -$1,359.9 , fv = 0 and type = 0
ANSWER:
I HAVE SOLVED THIS IN AN EXCEL AS PER YOUR REQUEST.
year 0 1 2 3 4 5
initial investment -499,000
annual expense -45000 -54900 -64800 -74700 -84600
annual revenues 199,000 199,000 199,000 199,000 199,000
cash flows -499,000 154,000 144,100 134,200 124,300 114,400
present worth -1,359.9
annual worth ($372.58)
As you can see cash flows are formed by subtracting annual expense from annual revenues and cash flow for year zero will be equal to initial investment.
present worth is calculated by using =npv formula which is =npv(rate,cash flows from year 1 to 5) + cash flow in year zero.
annual worth is calculated by using =-pmt formula which is =-pmt(rate,nper,pv,fv,type)
rate = 11.5% , nper = 5 years , pv = -$1,359.9 , fv = 0 and type = 0
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