GIVE STEP BY STEP SOLUTION step by step The following set of

GIVE STEP BY STEP SOLUTION (step by step)

The following set of cash flows occur for a retirement account earning at an inter Year 01 2 3 4 67 8 910 cash flow Note that this cash flow involves a gradient and uniform series. $10k $9.5k $9.0k $8.5k $8.0k $7.5k $7.0k $6.5k $6.0k $5.5k $5.0k What is the present worth of this cash flow at year 0? Give your answer in dollars and ignore cents in the answer, do not enter units or dollar signs.

Solution

Present Value = Future value/ ((1+r)^t) where r is 7% and t is the year Present worth in year 0 = sum of present values Year 0 1 2 3 4 5 6 7 8 9 10 cash flow 10000 9500 9000 8500 8000 7500 7000 6500 6000 5500 5000 Present value in year 0 10000 8878.50 7860.95 6938.53 6103.16 5347.40 4664.40 4047.87 3492.05 2991.64 2541.75 Present worth in year 0 = sum of present values 62866 Present worth of cash flow in year 0 = 62866