Question

A set of cash flows begins at $22482 the first year, with an annual decrease of 10% for 10 years. If the interest rate is 8%, the future value is close to...

I need help with this question, i know its a geometric gradient series but what formulas do i use...

thanks

Answer #1

**Answer :**

**Calculation of Future value**

First Cash Flow = $22,482

Annual Decrease = 10%

Term = 10 years

Interest Rate = 8%

The Formula For Future value of geometric gradient series :

Where A1 = First Cash Flow

i = Interest Rate

n = Term

g = Annual Increase / ( Decrease)

**So, putting the values in above formula**

**F = 22,482 x 10.056927**

**F = 226,099.83**

**So,future value is close to $ 226,100**

If the first payment is made at the beginnig of first year, then future value will be :

$226,100 + 8% = $244,188

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QUESTION 1:
Which of the following will decrease the present value of the
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