If the interest rate is 10% per year, what series of equal annual payments is equivalent to the following series of decreasing payments: $5,000, $4,000, $3,000, $2,000, $1,000? a. $3,000 b. $3,000 (1 + 0.1) =$ 3,300 c. [$5,000(F|P 10%,4) +$ 4,000(F |P 10%,3) +$ 3,000(F| P 10%,2) + $2,000(F|P 10%,1) + 1,000 ]/ 5 d. $5,000 − $1,000(A|G 10%,5).
If the interest rate is 10% per year, what series of equal annual payments is equivalent to the following series of decreasing payments: $5,000, $4,000, $3,000, $2,000, $1,000? a. $3,000 b. $3,000 (1 + 0.1) =$ 3,300 c. [$5,000(F|P 10%,4) +$ 4,000(F |P 10%,3) +$ 3,000(F| P 10%,2) + $2,000(F|P 10%,1) + 1,000 ]/ 5 d. $5,000 − $1,000(A|G 10%,5).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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If the interest rate is 10% per year, what series of equal annual payments is equivalent to the following series of decreasing payments: $5,000, $4,000, $3,000, $2,000, $1,000? a. $3,000 b. $3,000 (1 + 0.1) =$ 3,300 c. [$5,000(F|P 10%,4) +$ 4,000(F |P 10%,3) +$ 3,000(F| P 10%,2) + $2,000(F|P 10%,1) + 1,000 ]/ 5 d. $5,000 − $1,000(A|G 10%,5).
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