2.2 - Example Calculation of Present Worth
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Practice Questions
Test your understanding with targeted questions
Define the uniform series capital recovery factor.
💡 Hint: Think about loan repayments.
What does the present worth factor help you calculate?
💡 Hint: Recall our discussion on cash flow valuation.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does the uniform series capital recovery factor determine?
💡 Hint: Think about the purpose of loan repayments.
True or False: The present worth factor can be used to calculate future cash flows.
💡 Hint: Recall how we evaluated cash flows.
1 more question available
Challenge Problems
Push your limits with advanced challenges
A landscaping business needs to evaluate the purchase of a new lawnmower. The purchase price is $20,000, with an expected resale value of $5,000 after 5 years. If the interest rate is 5%, calculate the annualized ownership cost.
💡 Hint: Consider how to calculate both the depreciation and any associated operating expenses.
A company plans to replace machinery costing $100,000 after its 7-year life. They need to know how much to deposit each year into a sinking fund that compounds at a rate of 6% to gather the needed amount when the machine is replaced. Calculate the annual deposit amount.
💡 Hint: Think about using the sinking fund formula to find the annual deposits needed.
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