Question

1. Three contiguous countries in Florida have agreed to pool tax resources already designated for country-maintained bridge refurbishment. At recent meeting, the country engineers estimated that a total of $500,000 will be deposited at the end of next year into an account for the repair of old and safely-questionable bridges throughout the three-county area. Further, they estimate that the deposits will increase by $100,000 per year for only 9 years thereafter, and then cease. If county funds earn interest at rate of 5% per year, determine the equivalent:

1. Present worth, and
2. Annual series amounts.

Draw the cash flow diagram from the county’s perspective.

Answer 1