Please show work. Also, how is it formulated into excel? An investment of $500 i
ID: 1151830 • Letter: P
Question
Please show work. Also, how is it formulated into excel?An investment of $500 is made now and a series of $200 equal annual savings are realized beginning at the end of year 6 and continuing through the end of year 12. MARR IS 10%, what is the PW (present worth)? Please show work. Also, how is it formulated into excel?
An investment of $500 is made now and a series of $200 equal annual savings are realized beginning at the end of year 6 and continuing through the end of year 12. MARR IS 10%, what is the PW (present worth)?
An investment of $500 is made now and a series of $200 equal annual savings are realized beginning at the end of year 6 and continuing through the end of year 12. MARR IS 10%, what is the PW (present worth)?
Explanation / Answer
At year 0 , cash outflow is 500. From year 6 to year 12 annual savings of 200 are realized.
PW of the scheme is found as = -500 + 200 * [(P/A, 10%, 12) - (P/A, 10%, 5)]
= -500 + 200 * (6.8137-3.7908)
= 104.58
In excel this is found using excel formulas
= -500 + PV(10%,12,-200) - PV(10%,5,-200)................(Put this formula in excel and you will get 104.58 as a result)
= 104.58