9. 10.20

(a) Find the present worth of the following estimated cash flows. As indicated, some are expressed in future (then-current) dollars and others in current-value (today’s) dollars. Use a real interest rate of 10% per year and an inflation rate of 6% per year.

(b) (Spreadsheet exercise) Here’s a challenge. Write the single-cell spreadsheet function to determine PW. Table Summary: A table divided into 3 columns shows cash flows over 7 years. The column headers are marked as: Year; Cash Flow in dollars; and Expressed as. Year Cash Flow, $ Expressed as 0 16,000 Today’s 3 40,000 Then-current 4 12,000 Then-current 7 26,000 Today’s