Question: 93. Consider an EOY geometric gradient, which lasts for 8 years, whose initial value at EOY one is $3,000 and f = 5% per year

93. Consider an EOY geometric gradient, which lasts for 8 years, whose initial value at EOY one is $3,000 and

¯f = 5% per year thereafter. Find the equivalent uniform gradient amount over the same period if the initial value of the cash flows at the end of year one is $1,000.

Complete the following questions to determine the value of the gradient amount, G. The interest rate is 6% per year. (4.12)

a. What is P0 for the geometric gradient series?

b. What is P

0 of the uniform (arithmetic) gradient of cash flows?

c. What is the value of G?

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