What is the present worth of the cash flows in table below? Use an interest rate of 6% compounded annually.
$$\begin{array} { | l | l | l | l | l | l | l | }
\hline \text { Year } & 1 & 2 & 3 & 4 & 5 & 6 - 20 \
\hline \text { Cash flow } & 6,000 & 5,000 & 4,000 & 3,000 & 2,000 & 10,000 \
\hline
\end{array}$$
A) $89,263
B) $85,496
C) $89,915.77
D) $91,611

Question

What is the present worth of the cash flows in table below? Use an interest rate of 6% compounded annually.
  $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline \text { Year } & 1 & 2 & 3 & 4 & 5 & 6 - 20 \
\hline \text { Cash flow } & 6,000 & 5,000 & 4,000 & 3,000 & 2,000 & 10,000 \
\hline
\end{array}$$
A) $89,263
B) $85,496
C) $89,915.77
D) $91,611

Quizplus · Accepted Answer

The present worth is calculated by discounting each cash flow to the present value using the formula PV = CF / (1 + r)^n, where CF is the cash flow, r is the interest rate, and n is the year. Summing these present values gives the total present worth.

What Is the Present Worth of the Cash Flows in Table