Discrete Compounding 120 Single Payment Uniform Series Sinki

Discrete Compounding; 1-20% Single Payment Uniform Series Sinking Fund Factor To Find A Given F AIF 10000 0.4545 0.2747 0.1863 0.1344 0.1007 0.0774 0.0606 0.0481 0.0385 Capital Recovery Factor To Find A Given P AIP 1.2000 0.6545 0.4747 0.3863 0.3344 0.3007 0.2774 0.2606 0.2481 0.2385 Compound Amount Factor To FindF Given A FIA Compound Amount Present Worth Factor To Find P Given A PIA 0.8333 1.5278 2.1065 2.5887 2.9906 3.3255 3.6046 3.8372 4.0310 4.1925 Present Factor Worth Factor To FindF Given P FIP 12000 1.4400 1.7280 2.0736 2.4883 2.9860 3.5832 4.2998 5.1598 6.1917 To FindP Given F PIF 0.8333 0.6944 0.5787 0.4823 0.4019 0.3349 0.2791 0.2326 0.1938 0.1615 10000 2.2000 3.6400 5.3680 7.4416 9.9299 12.9159 16.4991 20.7989 25.9587 10

Solution

PW when we have 450 people

=(450*10-1500)*80=240000/year

240000(1-(1/1.2)^7)/0.2=865102

PW when we have 400 people

=(400*10-1500)*90=225000/year

225000(1-(1/1.2)^7)/0.2=811033

PW when we have 350 people

=(350*10-1500)*120=240000/year

240000(1-(1/1.2)^7)/0.2=865102

Now Expected PW equal to

0.6(865102)+0.35(811033)+0.05(865102)=0.65(865102)+0.35(811033)=$846177.9

Answer is 846177.9