An arithmetic cash flow gradient series equals $600 in year 1, $700 in year 2, and amounts increasing by $100 per year through year 9. At i = 9% per year, determine the present worth of the cash flow series in year 0.

The present worth of the cash flow series in year 0 is $
The question is properly stated and nothing is wrong with it!

Present value ofthe annuity 6,163.14

Explanation:

We build the schedule of the annuity:

#  Beginning / Installment/ Total / Interst / Ending

1                       6006001.09      654

2    654         700         13541.09     1,475.86

3   1475.868002275.861.09    2,480.69

4  2480.699003380.691.09    3,684.95

5  3684.9510004684.951.09    5,106.6

6  5106.611006206.61.09    6,765.19

7  6765.1912007965.191.09    8,682.06

8 8682.0613009982.061.09   10,880.45

9 10880.45140012280.45 1.09   13,385.69

Then we discount the future value at 9% to get the present value:

Maturity  $13,385.6900

time  9.00

rate  0.09000

PV   6,163.1435

answer; test-retest;

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