Questions (You only have to write in Excel one of the answers, the one you think is the correct answer to the question)

1. When in cell C1 the interest rate is 8% or 0.08 the present worth of this alternative is:

1. -$10,000
2. -$776.84
3. -$9,223.16
4. -$2,734.69

2. When in cell C1the interest rate is 10% or 0.10 the present worth of this alternative is:

1. -$8,756.72
2. -$11,211.43
3. -$10,000.00
4. -$1,243.28

3. When in cell C1the interest rate is 4% or 0.04 the present worth of this alternative is:

1. $10,000
2. $10,283.71
3. $283.71
4. $9,716.29

4. Which is the best alternative?

1. Interest of 8%
2. Interest of 4%
3. Interest of 10%
4. Both interests 8% and 10%

Student Instructions: 1. Read from the textbook the Example 4.1, the assignment is based on this example. Example 4.1 is going to be used to compute the present value 2. Have available the Microsoft Excel software program. 3. Construct a table in Example 4.1in the Microsoft Excel work sheet as shown below. The instructions are shown in the second table C E A D interest rate = 1 0.08 2 Positive Cash flow Negative Cash Flow Present Worth Net Cash Flow Year -10000 2310 -10000 2138.89 4 0 -10000 5310 -3000 5 1 2310 2310 2310 2310 3000 6 2 5310 1980.45 1833.75 1697.92 -3000 -3000 7 3 5310 8 5310 -3000 5310 1572.15 9 5 10 Present Worth is equal to: 11 12 13 interest rate 14 0.08 15 Positive Cash flow Negative Cash Flow Net Cash Flow 16 Present Worth Year -E4*(1+$C$1)^{-B4)| -E5*(1+$C$1)^{-B5) -E6*(1+$C$1)^{-B6) -E7*(1+$C$1)^(-B7) | =E8*(1+$C$1)^{-B8) E9* (1+$C$1)^{-B9) -10000 -C4+D4 17 0 -3000 C5+D5 -3000 C6+D6 -3000 C7+D7 5310 5310 18 1 19 5310 20 -3000C8+D8 21 4 5310 -3000 C9+D9 22 5 5310 23 Present Worth SUM(F17:F22) 24 25