A cash flow series is increasing geometrically at the rate of 9% per year. The i

Question

A cash flow series is increasing geometrically at the rate of 9% per year. The initial payment at EOY 1 is $4,000, with increasing annual payments ending at EOY 20. The interest rate is 17% compounded annually for the first eight years and 4% compounded annually for the remaining 12 years. Find the present amount that equivalent to this cash flow Click the icon to view the interest and annuity table for discrete compounding when the MARR is 4% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 17% per year. The present amount that is equivalent to this cash flow series is s(Round to the nearest dollar.)

Explanation / Answer

Years Cash flow Discount factor @ 17% for first 8 yrs and 4% for next 12 yrs Present Value 1 4000 0.854700855 3418.803 2 4360 0.730513551 3185.039 3 4752.4 0.624370556 2967.259 4 5180.116 0.533650048 2764.369 5 5646.326 0.456111152 2575.352 6 6154.496 0.389838592 2399.26 7 6708.4 0.333195378 2235.208 8 7312.156 0.284782374 2082.373 9 7970.251 0.702586736 5599.792 10 8687.573 0.675564169 5869.013 11 9469.455 0.649580932 6151.177 12 10321.71 0.62459705 6446.907 13 11250.66 0.600574086 6756.854 14 12263.22 0.577475083 7081.703 15 13366.91 0.555264503 7422.17 16 14569.93 0.533908176 7779.005 17 15881.22 0.513373246 8152.995 18 17310.53 0.493628121 8544.966 19 18868.48 0.474642424 8955.782 20 20566.65 0.456386946 9386.348 109774.4 The present amount that is equivalent to this cash flow series is $ 109774

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