Question Description

Please answer the following questions on the concepts of time value of money and measure of worth.

Draw the corresponding cash flow diagrams when necessary.

a). If an investment of $4000 is made today grows to $7600 four years from now, determine the approximate rate of return.

b) In how many years, doing uniform investments of $400 per year will yield $10,000 with the rate of return of 16%.

c) An oil and gas company bought a particular production machine, the initial maintenance cost of which is stated to be $4500. If the maintenance cost is expected to increase to a level of $15,000 in 11 years, determine the constant amount of increase in the operating cost per year (G), and construct the corresponding cash flow diagram.

d) An oil and gas company plans to deposit money in to an account for the expected maintenance costs in the future. The base amount of money that will be deposited at the end of next year is stated to be $4500, which is estimated to increase by $500 per year for 9 years. Determine the equivalent (1) present worth and (2) annual series amounts if funds earn interest at a rate of 8% per year.

Construct the corresponding cash flow diagrams.