An amortization of a debt is in a form of a gradient series of P10,000 on the first year, P9,500 on the second year, P9,000 on the third year, P8,500 on the fourth year. Determine the equivalent present worth of the debt if interest is 0.16.

An amortization of a debt is in a form of a gradient series of P10,000 on the first year, P9,500 on the second year, P9,000 on the third year, P8,500 on the fourth year. Determine the equivalent present worth of the debt if interest is 0.16.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

An amortization
of a debt is in a form of a
gradient series of P10,000 on the first year,
P9,500 on the second year, P9,000 on the
third year, P8,500 on the fourth year.
Determine the equivalent present worth of
the debt if interest is 0.16.
Note: Interest is already shown in decimal form. Do not round in
between solution and no need to put UOM. Final answer round to
the nearest WHOLE NUMBER.

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Step 1: Determine the cash flow

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Step 2: Determine uniform annual equivalent cash flow:

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Step 3: Determine present worth:

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