Problem 3: A series of four annual constant-dollar payments beginning with $15,000 at the end of the first year is growing at the rate of 8% per year. Assume that the base year is the current year (n = 0). If the market interest rate is 13% per year and the general inflation rate (f) is 7% per year, find the present worth of this series of payments, based on: a) constant-dollar analysis. b) actual-dollar analysis.

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Problem 3:
A series of four annual constant-dollar payments beginning with $15,000 at the end of the first
year is growing at the rate of 8% per year. Assume that the base year is the current year (n = 0).
If the market interest rate is 13% per year and the general inflation rate (f) is 7% per year, find
the present worth of this series of payments, based on:
a) constant-dollar analysis.
b) actual-dollar analysis.
Transcribed Image Text:Problem 3: A series of four annual constant-dollar payments beginning with $15,000 at the end of the first year is growing at the rate of 8% per year. Assume that the base year is the current year (n = 0). If the market interest rate is 13% per year and the general inflation rate (f) is 7% per year, find the present worth of this series of payments, based on: a) constant-dollar analysis. b) actual-dollar analysis.
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