Exercise 1

A company providing electronic maintenance &

services has signed a contract to maintain electronic
gadgets in a university's facilities. What is the
contract's present value (in year 0), if the company
receives nine $12,000 payments beginning in year 2
and ending in year 10, and the interest rate is 10%
each year?

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Exercise 2

Aurora Pte Ltd. operates diesel-powered generators

to supply standby power to pumping facilities. The
utilization of natural gas to power the generators is
an option, but it will take several years before the gas
is available in remote locations. Aurora Pte Ltd.
predicts that converting to gas will save its $15,000
each year from now until the end of the year 20.
Determine the present value of the estimated savings
at an interest rate of 8% per year.

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Exercise 3

ITConTech, a 14-inch laptop manufacturer, is

analyzing its cash flow requirements for the next 5
years. Over the 5-year planning period, the firm
intends to replace office machinery and computer
equipment at various points. In particular, the firm
anticipates spending $7,000 in 2 years, $9,000 in 4
years, and $15,000 in 5 years. What is the yearly
value of the projected expenditures at a 10% annual
interest rate during the first 5 years? Create a single-
cell spreadsheet function to determine A.

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Exercise 4

A company named FirstBiz needs to pay its $900,000

debt in eight equal instalments beginning 2 years
from now. How much will FirstBiz have to pay each
year if the interest rate per year is 8%?

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Exercise 5

How much money Andy would gather 18 years from

now from $15,000 that he deposited every year for 5
consecutive years, starting from 3 years from now, if
the interest rate is 8% per year?

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Exercise 6

The new General Manager plans to reduce future

production costs in order to increase the company’s
profit. To improve production, the company needs to
invest $70,000 now and $50,000 each of the next
two years. How much must annual costs decrease in
years 3 through 10 to recover the plus a return of
15% per year?

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Exercise 7

Determine the present value in year 0 for the cash

flows presented. Assume I = 10% per year.

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Exercise 8

Determine the present worth in year 0 of the cash

flow shown in the diagram below, with interest rate
of 12% per year.

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Exercise 9

A design consultant has just purchased an upgraded

BIM software for $5,000 now and there are annual
payments of $500/year for 6 years, starting 3 years
from now for the annual software upgrades. What is
the present worth in year 0 of all these payment,
assuming the interest rate is 8% per year?

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Exercise 10

An engineering consultant makes a proposal to a

mining company that it pay $20,000 per year for 20
years beginning 1 year from now, plus $10,000 at 6
years from now and $15,000 at 16 years from now.

If the mining company wants to pay off its lease

immediately, how much should it pay now if the
investment is to make 16% per year?

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