GEOMETRIC GRADIENT: Calculate the Present Worth.

The first-year maintenance cost for a new automobile is estimated to be $100, and it increases at a uniform rate of 10%per year.Using an 8% interest rate, calculate the present worth of cost of the first 5 years of maintenance.

STEP-BY-STEP SOLUTION


SOLUTION USING GEOMETRIC SERIES PRESENT WORTH FACTOR


The present worth of cost of maintenancefor the first 5 years is $480.42.

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