Determine the present worth of the two contracts

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Reference no: EM133402070

Question: Civil engineering consulting firms that provide services to outlying communities are vulnerable to a number offactors that affect the financial condition ofthe communities, such as bond issues, real estate developments, etc, A small consulting firm entered into a fixed- price contract with a spec home builder, resulting in a stable income of $390,000 per year in years 1 through 5. At the end of that time, a mild recession slowed the development, so the parties signed another contract for $170,000 per year for 6 more years. Determine the present worth of the two contracts at an interest rate of 8% per year.

Reference no: EM133402070

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