An easy payment plan offered by a local electronics store for your new audio system calls for end-of-year payments of $2,000 at the end of year 1, increasing by 15% each year thereafter through year 4. Your money is wellinvested and earns a consistent 10% per year. a. What is the present worth of these payments? b. If you prefer to make equal annual payments having the same present worth, how much would they be?

An easy payment plan offered by a local electronics store for your new audio system calls for end-of-year payments of $2,000 at the end of year 1, increasing by 15% each year thereafter through year 4. Your money is wellinvested and earns a consistent 10% per year. a. What is the present worth of these payments? b. If you prefer to make equal annual payments having the same present worth, how much would they be?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 22P

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An easy payment plan offered by a local electronics store for your new audio system calls for end-of-year payments of $2,000 at the end of year 1, increasing by 15% each year thereafter through year 4. Your money is well
invested and earns a consistent 10% per year. a. What is the present worth of these payments? b. If you prefer to make equal annual payments having the same present worth, how much would they be?

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