Answered

Welcome to Westonci.ca, the place where your questions find answers from a community of knowledgeable experts. Experience the ease of finding reliable answers to your questions from a vast community of knowledgeable experts. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.

what is the equivalent present amount of an eight year series of decreasing amaounts if the interest rate is 10% compounded annually, the first year amount is $20,000, and the rate of decrease is $800 per year

Sagot :

Answer: $93,876

Explanation:

The equivalent present amount of an 8year series of decreasing amounts when the interest rate is 10% compounded annually, the first year amount is $20,000, and the rate of decrease is $800 per year will be calculated thus:

PV = C / (1+r) ^ t

= 20,000/1.1 + 19,200/1.1² + 18,400/1.1³ + 17,600/1.1⁴ +16,800/1.1^5 + 16,000/1.1^6 + 15,200/1.1^7 + 14,400/1.1^8

= $93,876

Therefore, the equivalent present value is $93,876.

We appreciate your time. Please come back anytime for the latest information and answers to your questions. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Get the answers you need at Westonci.ca. Stay informed with our latest expert advice.