Calculate the present value of the stream of costs

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Reference no: EM131242454

In the following two cases, calculate the present value of the stream of costs and benefits first using a discount rate of i = .03.

(a) Costs follow the function C(t) = $(10+2t), where t indexes time, t = 0, 1, 2, 3, 4, 5, with level benefits of $25 per year.

(b) Current one-time cost of $40 and future benefits of $1 this year and another $1 per year forever (infinite time horizon). Hint: this is a geometric series. Get out a math textbook or go online and see the value to which it converges.

Reference no: EM131242454

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