Consider the investment project given below for n 0 through

\"Consider the investment project given below for n = 0 through 3: ($)
-18,900
-6,900
-17,000
7,300
Compute the net future worth of each project at i = 13.4%.\"

Solution

Net Future Worth ($) = - 18,900 x F/P(13.4%, 3) - 6,900 x F/P(13.4%, 2) - 17,000 x F/P(13.4%, 1) + 7,300

= - 18,900 x 1.4583** - 6,900 x 1.286** - 17,000 x 1.134** + 7,300

= - 27,561.87 - 8,873.4 - 19,278 + 7,300

= - 48,413.27

**When there are \"n\" periods, FV Factor at year N = (1 + r)^n-N

In year 0, FV factor = F/P(13.4%, 3) = (1.134)³ = 1.4583

In year 1, FV factor = F/P(13.4%, 2) = (1.134)² = 1.2860

In year 2, FV factor = F/P(13.4%, 1) = (1.134)¹ = 1.134