Q2The following deposits are made into an account that pays

Q2-The following deposits are made into an account that pays interest at a rate of 12%. Determine a) Present worth b) Future worth c) Annual worth Year Cash Inflow -Deposit 1650 1500 1350 1200 1050 900

Solution

(a) PW

PV factor at 12% in year N = (1.12)^-N

(b) FW

FV factor at 12% in year N = (1.12)^{(6 - N)}

(c) AW

AW = PW / PVIFA(12%, 6) = $5444.30 / 4.1114*** = $1324.20

**From PVIFA Factor table

Year	Deposit ($)	PV factor @12%	Discounted Deposit ($)
	(A)	(B)	(A) x (B)
1	1650	0.8929	1473.21
2	1500	0.7972	1195.79
3	1350	0.7118	960.90
4	1200	0.6355	762.62
5	1050	0.5674	595.80
6	900	0.5066	455.97
		PW ($) =	5444.30