What is the present worth and future worth

Assignment Help Financial Management

Reference no: EM132036469

Question

Use the following cash flow for problems a through g.

In year 0 you paid $50000 for a machine

In years 1 through 5 you made $10000 per year from the machine

In year 3 you had to pay an additional $10000 to keep the machine going

In year 5 you sold the machine for $20000

a. Draw the cash flow diagram for this problem

b. Calculate the Present Worth (PW) at 10% interest

c. Calculate the Future Worth (FW) at 10% interest.

d. Calculate the Annual Worth (AW) at 10% interest.

e. What is the payback period?

f. Is this a viable project?

g. If you solve for an Internal Rate of Return (IRR) using a present worth equation, what value do you set the present worth to in order to solve the equation?

Jack Black, engineer extraordinaire, had just returned from taking a 30-page exam in his engineering management graduate program. His boss, Lucy (who certainly had a thing for diamonds and atmospheric sciences) asked Joe to evaluate a new project. Because Jack was quite discombobulated from his testing extravaganza he had a tough time. He persevered and brought Lucy two answers. A future worth that was > 0 and a present worth that was < 0. What should Lucy say to Jack?

What is the present worth, future worth, and annual worth of the following project if i = 10% per year? Hint: 1) You might want to consider the 5 as an A for all 8 years and have some additional + or - cash flows in years 4, 5, and 8. OR 2) Use NPV function in Excel for years 1 thru 8 and subtract 25.

year	Cash Flow
0	-25
1	5
2	5
3	5
4	1
5	7
6	5
7	5
8	11

You have a different group of technicians with a different learning curve. Their first item took 50 minutes and you went to lunch (very long) and didn't measure their 2^nd or 3^rd item's time.

You did get the 4^th item's time which was 25 minutes. What is this group's learning curve slope parameter? For +1, does your answer look like any other "sort of" common number you know?

Here is a NEW and DIFFERENT type of learning curve table. What is the value of n in the equation
Z_u = Kuⁿ for this table?
Number of Units         Z/K
                 1                 1
                 3                 0.9
                 9                 0.81

Reference no: EM132036469

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