The payment changes with geometric gradient

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Reference no: EM131984724

You want to buy a machine with the present worth of QR 100,000. You were able to finance it through a Murabaha contract. The bank has set its anual rate of return a 19.56% to be paid over 7 years. The first payment (to be paid at end of the first year) is QR 10,000. At the end of each subsequent year, the payment changes with a geometric gradient according to a certain percentage (g), with the last payment occurring at the end of the 7th year. Draw the cash flow diagram from your perspective, and find g.

Reference no: EM131984724

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