Present Value Homework Solution - Engineering Economy | ISYE 6225, Assignments of Systems Engineering

Download Present Value Homework Solution - Engineering Economy | ISYE 6225 and more Assignments Systems Engineering in PDF only on Docsity! Present Value Homework Solutions 1. a. 1000(1.08)4 = 1360.49. b. 1000(1.04)8 = 1368.57. c. 1000(1.02)30 = 1811.36. d. 1000e.32 = 1377.13. 2. a. FV = 1000 (1 + 0.06/4)20 = 1346.86. b. (1 + 0.06/4)4 = 1.06136 ⇒ 6.14% 3. 40,000/(0.09 – 0.05) = 1,000,000. This is the value of the future cash flow stream “as seen” at time t = 2. The PV at time 0 therefore equals 1,000,000 / (1.09)2 = 841,680. 4. a. Total cash paid out is the integral of C(t) over [0, 2], which equals 100t3. Answer is 800. b. Multiply C(t) by exp{-0.1t} and integrate over [0, 2] to obtain PV. Then multiply by exp{0.3} to obtain the future value (FV). Alternatively, you can multiply C(t) by exp{0.1(2-t)} and integrate over [0, 2] to obtain FV at t = 2. Then multiply by exp{0.1} to obtain the FV at time t = 3.