Project ForgePlant Design & Economics
Profitability Analysis
GATE 2014
Medium
A cash flow of Rs 12,000 per year is received at the end of each year (uniform periodic payment) for 7 consecutive years. The rate of interest is 9% per year compounded annually. The present worth (in Rs) of such cash flow at time zero is _____
60500 Rs(± 500 accepted)
Explanation
PW=A×[(1+i)ⁿ−1]/[i(1+i)ⁿ], with A=12000, i=0.09, n=7. (1.09)⁷≈1.8280. PW=12000×(1.8280−1)/(0.09×1.8280)=12000×0.8280/0.16452≈12000×5.033≈60,400 Rs.
Source: GATE CH 2014 (2014)
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