Answered

Get the most out of your questions with IDNLearn.com's extensive resources. Ask your questions and receive prompt, detailed answers from our experienced and knowledgeable community members.

what is the equivalent present amount of an eight year series of decreasing amaounts if the interest rate is 10% compounded annually, the first year amount is $20,000, and the rate of decrease is $800 per year

Sagot :

Answer: $93,876

Explanation:

The equivalent present amount of an 8year series of decreasing amounts when the interest rate is 10% compounded annually, the first year amount is $20,000, and the rate of decrease is $800 per year will be calculated thus:

PV = C / (1+r) ^ t

= 20,000/1.1 + 19,200/1.1² + 18,400/1.1³ + 17,600/1.1⁴ +16,800/1.1^5 + 16,000/1.1^6 + 15,200/1.1^7 + 14,400/1.1^8

= $93,876

Therefore, the equivalent present value is $93,876.

We greatly appreciate every question and answer you provide. Keep engaging and finding the best solutions. This community is the perfect place to learn and grow together. Thank you for visiting IDNLearn.com. We’re here to provide clear and concise answers, so visit us again soon.