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Social ScienceWhat is the equal-payment series for 10 years that is equivalent to a payment series starting with $30,000 at the end of the first year and decreasing by $3,000 each year over 10 years? Interest is 8% compounded annually.
What is the equal-payment series for 10 years that is equivalent to a payment series starting with $30,000 at the end of the first year and decreasing by $3,000 each year over 10 years? Interest is 8% compounded annually.
Expert Answer
The first step is to compute the total present value of cashflows for 10 years which is decreasing each year by $ 3000.
The same has been computed by applying the present value factors for each respective cashflows and the sum of those present values is taken.
After the to...
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