The Pedernales Electric Cooperative estimates that the present worth now of income from an investment in renewable
Question:
The Pedernales Electric Cooperative estimates that the present worth now of income from an investment in renewable energy sources is $12,475,000.
There will be no income in years 1 and 2, but in year 3 income will be $250,000, and thereafter it will increase according to an arithmetic gradient through year 15. What is the required gradient, if the interest rate is 15% per year? Solve
(a) By hand and
(b) Using a spreadsheet.
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