Determine the present worth of geometric gradient series

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Reference no: EM131530514

1. Determine the present worth of a geometric gradient series with a cash flow of $50,000 in year 1 and increases of 6% each year through year 8. The interest rate is 10% per year.

2. Determine the difference in the present worth values of the following two commodity contracts at an interest rate of 8% per year.

Contract 1 has a cost of $10,000 in year 1; costs will escalate at a rate of 4% per year for 10 years.

Contract 2 has the same cost in year 1, but costs will escalate at 6% per year for 11 years.

Reference no: EM131530514

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