2. * (Inspired by CT1 exam April '09) A company has agreed to rent a warehouse for 30 years. The rent will be paid quarterly in advance and will increase every three years at the rate of 3% per annum compound. The initial rent is set at £1,200,000 p.a. with the first payment duo immodiatoly Calculate the NRW of th fintoroct of 5% na

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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2. (Inspired by CT1 exam April '09) A company has agreed to rent a warehouse for 30 years.
The rent will be paid quarterly in advance and will increase every three years at the rate of
3% per annum compound. The initial rent is set at £1,200,000 p.a. with the first payment
due immediately. Calculate the NPV of the contract at a rate of interest of 5% p.a.
Transcribed Image Text:* 2. (Inspired by CT1 exam April '09) A company has agreed to rent a warehouse for 30 years. The rent will be paid quarterly in advance and will increase every three years at the rate of 3% per annum compound. The initial rent is set at £1,200,000 p.a. with the first payment due immediately. Calculate the NPV of the contract at a rate of interest of 5% p.a.
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why do we use the same value in step three for the remaining 15 years , instead of finding the new value with 3% increase after that 

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