A A Aa AaBbCDd Aabcbate AaBbC Q2The following deposits are m

A A- Aa AaBbCDd Aabcbate AaBbC 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 Cash Inflow Deposit 1650 1500 1350 1200 1050 900

Solution

(a) Present worth (PW) is computed as follows. Note that PV factor in year N = (1.12)-N

(b) Future worth (FW) is computed as follows. Note that FV factor in year N = (1.12)^6-N

(c) AW = PW / P/A(12%, 6) = $5444.30 / 4.1114*** = $1324.20

Year	Cash Flow ($)	PV factor @12%	Discounted Cash Flow ($)
	(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