3.2. Single Payment Present Worth Factor

Try these first

1. 1.

   What is the uniform series capital recovery factor?

   Hint

   Think of how loans are paid off.

2. 2.

   Define ownership costs.

   Hint

   Think about what costs come with owning equipment.

3. 3.

   What does the uniform series capital recovery factor calculate?

   • Total loan amount
   • Annual payment
   • Initial investment

   Hint

   Think about loan repayments.

4. 4.

   True or False: The present worth factor can help determine the present value of future earnings.

   • True
   • False

   Hint

   Remember the role of present and future cash flows.

5. 5.

   A company wants to buy new machinery that costs $180,000. If they plan to finance the machinery over 10 years at an interest rate of 7%, determine the annual payment.

   Hint

   Categorize all your known quantities before substitution.

6. 6.

   How would you utilize the concept of sinking fund to prepare for a $50,000 equipment purchase in 5 years?

   Hint

   Consider how to grow your savings to meet the future cost.