Final answer:
To find the Present Worth (in year 0) of the losses for all four years, we can calculate the present value of each year's loss and sum them up using the formula PV = FV / (1 + i)^n. The total Present Worth is $104.99 million.
Step-by-step explanation:
To find the Present Worth (in year 0) of the losses for all four years, we need to calculate the present value of each year's loss and then sum them up.
We can use the formula:
PV = FV / (1 + i)^n
Where:
- PV is the present value
- FV is the future value
- i is the interest rate per year
- n is the number of years
Let's calculate:
Year 1: PV = 50 / (1 + 0.1)^1 = $45.45 million
Year 2: PV = 40 / (1 + 0.1)^2 = $33.06 million
Year 3: PV = 30 / (1 + 0.1)^3 = $22.13 million
Year 4: PV = 5 / (1 + 0.1)^4 = $3.35 million
The Present Worth of the losses for all four years is the sum of these present values:
Total PV = $45.45 million + $33.06 million + $22.13 million + $3.35 million = $104.99 million