Problem 1-4

An investment of $100,000 today is equal to pay 10 annual payments of $15,000 each. Compute the rate of return (ROR) on this investment to the second decimal place.

Problem 2-5

Determine the ROR for a project that has an initial cost of $82,000 and would provide positive cash flows (benefits) of $12,000 the first year, $14,000 the second year, $16,000 the third year, $18,000 the fourth year, $20,000 the fifth year, and $15,000 the sixth year.

Problem 3-6

A major equipment purchase is being considered by Metro Atlanta. The initial cost is determined to be $1,000,000. It is estimated that this new equipment will save $100,000 the first year and increase gradually by $50,000 for the next 6 years. Annual interest rate=10%. Please calculate the Future Worth.