The university your daughter wants to go in the fall of 2107 requested that you pay the tuition for all 4 years upfront when she starts school. The current tuition bill is $50,000. You expect the inflation rate to average 2% per year, and that the university pays a 4 % interest per year for the four year period. What is the present worth of your payment?

The office of management and Budget (OMB) stipulates that a 7% interest rate be used in economic analysis of federal projects.

Sue borrowed $1,000 from Tom and paid him back very generously with a $2,000 check when she won a lottery after 8 years. The compound interest rate on this loan is 16.67%.

Land is a depreciable asset as land appreciates overtime.

An equipment bought at cost of $Y will be depreciated using either the SOYD (sum- of -years – digit method) or SL (straight-line) method. This equipment will be depreciated over a period of 5 years with a salvage value of $X. Determine the percentage increase in depreciation charges in year 2 for the SOYD method over the SL method.

Jain Mart is to depreciate an asset bought for $500,000 using the SOYD method over a life of 8 years. If the depreciation charges in year 3 was $80,000, determine the salvage value used in computing the depreciation charges in year 3.

The NPW of a set of cash flows will decrease as the interest rate is increased.

An investment set up as a perpetual trust provides an annual disbursement of $25,000 for the first 20 years and an undetermined amount from year 21. If the trust is set up with $500,000, determine the disbursement that can be made from year 21 through infinity if the interest earned is 6% per year.

Since cash flows like receipts and disbursements occur at different time periods, for evaluation of alternative, the cash flows can be added and subtracted ignoring the time vale of money.

The NFW of this investment is ___________.