Question

For the following CFD, at what actual time period is the resulting P when finding P = 2000(P/A,8%,3)?

t=1
t=0
t=3
t=5
t=2

Answer 1

I said answer: (e)

Answer 2

Because we need the present amount before

Answer 3

a year before

Answer 4

Yes, I know.

Answer 5

Then why did you think the answer was e) t = 2 ????

Answer 6

Let me look at something in the text, apparently not understand the relationship between p and A

Answer 7

t= 3

Answer 8

This is a uniform series compound interest right?

Answer 9

Did you calculate the value of P at year 6 ???

I got $6492.80

his is a uniform series compound interest right? I think that is correct/

Answer 10

Why do I need to calculate the P at year 6?

Answer 11

Just for practice.

Answer 12

Oh okay

Answer 13

I can do that

Answer 14

I just want to see if I did it right.

Answer 15

I will even attach an image with my solution.

Answer 16

I am pretty sure I am correct because I even compared using the values we have in the back of the textbook. The present worth factor.

Answer 17

You mind checking my work for the next problem? I have a solution to it.

Answer 18

You did it correctly for a 6 year time period , but wrong for the problem asked. Based on the CFD, the first 3 years P is zero so the ACTUAL time period is 6 - 3 or three

so...

P when finding P = 2000(P/A,8%,3) is the equation to calculate the P at year 6.

Answer 19

Oh tricky. I see why you asked that.

Answer 20

My mistake even your calculation of the 6 year time period doesn't appear to be correct....

I got $14,671.85 much more than $9245.75

Maybe I not doing it right.

Answer 21

Wait why would it not be 4 years instead? First 3 years P = 0 but from 5 to 6 P = 0 as well

Answer 22

Unless the first period from 0 to 1 doesn't count

Answer 23

The Register Company just purchased a new piece of equipment. At the end of year 4, the company will begin paying maintenance costs of $23473 per year. The company will pay the maintenance costs for 8 years, at which point the equipment will be sold. How much should Register set aside today, in an account paying an annually compounded interest rate of 1%, to pay for the future maintenance?

Answer 24

No, you still have principle and interest from year 5 to 6. The P and interest start a year 3,

4 5 and 6 count for 3 years.

Answer 25

This new question might take a while.

Answer 26

Why does the P start at year 3 instead of 2?

Answer 27

Here lets do another example of a problem like before.

Answer 28

An energy-effcient machine costs $5000 and has a life of 5 years. If the interest rate is 8%, how much must be saved every year to recover the cost of the capital invested in it?