Chapter 3: Combining Factors

Assessments #1

What is the net present value (NPV, Ptotal) of option 1

How much money would be available in year 10 if $8000 is deposited each year in years 3 through 10

at an interest rate of 10% per year?

Find the present worth in year 0 for the cash flows

shown using an interest rate of 10% per year.

John Deere expects the cost of a tractor part to increase by $5 per year beginning 4 years from now. If the cost in years 1-3 is $60, determine the present worth in year 0 of the cost through year 10 at an interest rate of 12% per year.    

Weirton Steel signed a 5-year contract to purchase water treatment chemicals from a local distributor for $7000 per year. When the contract ends, the cost of the chemicals is expected to increase by 12% per year for the next 8 years. If an initial investment in storage tanks is $35,000, determine the equivalent present worth in year 0 of all of the cash flows at i = 15% per year.

For the cash flows shown, find the future worth in year 7 at i = 10% per year

Which bank gets more return between TTB or Kept bank?

• TTB bank

• Kept bank