Engineering Board Exam Reviewer · Present Worth Analysis · medium
An investment pays P40,000 at the end of each year for 8 years, with the first payment at the end of year 4. Find its present worth at 10% interest.
- P160,328.36
- P213,397.05
- P145,753.06
- P176,361.20
Answer
A. P160,328.36
Solution
Value the annuity one period before its first payment (end of year 3), then discount: PW=40,000(P/A,10%,8)(P/F,10%,3)=40,000(5.3349)(0.751315)=P160,328.36.
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