Profits from recycling paper, cardboard, aluminum, and glass at a liberal arts college have increased at a constant rate of $1,100 in each of the past three years. If this year's profit (at the end) is expected to be $6,000 and the trend continues through year 5, a) what will the profit be at the end of year 5 and b) what is the present value of the profit at an interest rate of 8% per year?

Profits from recycling paper, cardboard, aluminum, and glass at a liberal arts college have increased at a constant rate of $1,100 in each of the past three years. If this year's profit (at the end) is expected to be $6,000 and the trend continues through year 5, a) what will the profit be at the end of year 5 and b) what is the present value of the profit at an interest rate of 8% per year?

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

Profits from recycling paper, cardboard, aluminum, and glass at a liberal arts
college have increased at a constant rate of $1,100 in each of the past three
years. If this year's profit (at the end) is expected to be $6,000 and the trend
continues through year 5, a) what will the profit be at the end of year 5 and b)
what is the present value of the profit at an interest rate of 8% per year?

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