A cash flow profile starts with $2,000 and increases by $1,000 each year up to $21,000 at time 20. Then, it starts again with $21,000 at time 21 and decreases by $1,000 each year to $2,000 at year 40. You desire to convert itto an equivalent gradient series beginning at year 1 with $X and continuingthrough year 40 with $500 increases each year (ending at $X + 19,500 at time40). Interest is 8% compounded annually. What is X?
A cash flow profile starts with $2,000 and increases by $1,000 each year up to $21,000 at time 20. Then, it starts again with $21,000 at time 21 and decreases by $1,000 each year to $2,000 at year 40. You desire to convert itto an equivalent gradient series beginning at year 1 with $X and continuingthrough year 40 with $500 increases each year (ending at $X + 19,500 at time40). Interest is 8% compounded annually. What is X?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A cash flow profile starts with $2,000 and increases by $1,000 each year up to $21,000 at time 20. Then, it starts again with $21,000 at time 21 and decreases by $1,000 each year to $2,000 at year 40. You desire to convert it
to an equivalent gradient series beginning at year 1 with $X and continuing
through year 40 with $500 increases each year (ending at $X + 19,500 at time
40). Interest is 8% compounded annually. What is X?
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