Present worth values of the two commodity contracts

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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: EM13858832

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