If interest is 10%, find the net present worth, net future worth, and net annual equivalent worth. (b) Find the rate of return. (Hint: The guessing range is 25 to 30%). (c) Present a summary of the four methods

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
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Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 29P
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An estimate has the following cost and revenue cash flows. The cash flows are assumed to occur at the end of the year.

(a) If interest is 10%, find the net present worth, net future worth, and net annual equivalent
worth.
(b) Find the rate of return. (Hint: The guessing range is 25 to 30%).
(c) Present a summary of the four methods

Year Cost Revenue
0 $800 $0
1 - $450
2 - $425
3 - $400
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