The following set of cash flows occur for a retirement accou

The following set of cash flows occur for a retirement account earning at an interest rate of 7% Year 0 $10k $9.5k $9.0k $8.5k $8.ok $7.5k $7.0k $6.5k $6.0k $5.5k s5.0k flow Note that this cash flow involves a gradient and uniform series What is the future worth of this cash flow at year 10? Give your answer in dollars and ignor e cents in the answer, do not enter u nits or dollar signs.

Solution

Find the future worth of the cash flow by first finding the present worth using a negative gradient and then multiplying with the future worth formula

FUTURE Worth = [10000 + 9500(P/A, 7%, 10) - 500(P/G, 7%, 10)](F/P, 7%,10)

= (10000+9500*7.02358 - 500*27.71555)*1.96715

= $123,667