Question

At the end of year 6, what will be the value of a series of payments where first cost (at present time) is $10,000 and annual revenue starts at $1000 at the end of year one, increases to $3000 for year 2, $5000 for year 3, $7000 for year 4, and $9000 for year 5? Assume the interest rate to be 5%​

Answer 1

Calculate the equivalent uniform annual worth value for all cash flows in the first life cycle. AW = -15,000(A/P, 15%, 6) + 1000(A/F, 15%, 6) - 3500 = $-7349 When the same computation is performed on each succeeding life cycle, the AW value is $-7349.