Present Worth, Annual Worth:

1.1 The cash flow associated with making self-locking fasteners is shown below. Determine the net present

worth (year 0) at an interest rate of 10% per year.

1.2 Two engineering graduates who recently got married are planning for their early retirement 20 years from

now. They believe that they will need $2,000,000 in year 20. Their plan is to live on one of their salaries and

invest the other. They already have $25,000 in their investment account. (a) How much will they have to

invest each year if the account grows at a rate of 10% per year? (b) If the maximum they have available to

invest each year is $40,000, will they reach their goal of $2 million by year 20?

1.3 For the cash flow diagram shown, determine the value of W that will render the equivalent future worth in

year 8 equal to $500 at an interest rate of 10% per year.