Final answer:
The student's question involves calculating the present value of a series of future cash flows from a project investment, using a given interest rate to discount those future payments to their current worth.
Step-by-step explanation:
The student is asking about the present worth of a project that involves a $100,000 investment now and will return $30,000 annually for five years at an interest rate of 12%. Present worth or present value is a financial concept that calculates the current value of a series of future cash flows given a specific discount rate. To solve this, one would use the present value formula for each individual cash flow: Present Value = Future Cash Flow / (1 + Interest Rate)^t Where t is the number of years into the future the cash flow will occur. For recurring annual payments, this formula is applied for each payment with the appropriate year inserted for t. Once the present value for each of the five payments is calculated, they are summed, and then the initial investment is subtracted to obtain the net present worth of the project.