Questions

## Question:

Pop Quiz: Oct 17th

Using the linear gradient above, find the present worth and future worth with a 0% interest rate.

## Answer:

(1)
$$Present worth = 15$$
(2)
$$Future Worth = 15$$

With a 0% interest rate we simply add the values from all periods together, yielding 15. Or, we could conduct PW and FW calculations, both yielding 15.

(3)
$$Present Worth = 0/1 + 1/1^2 + 2/1^3 + 3/1^4 + 4/1^5 + 5/1^6 = 15$$
(4)
$$Future Worth = 0(1)^6 + 1(1)^5 + 2(1)^4 + 3(1)^3 + 4(1)^2 + 5(1) = 15$$
page revision: 1, last edited: 25 Jun 2010 20:21
Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License