Question: 02.05-PR032 An easy payment plan offered by a local electronics store for your new audio system calls for end-of-year payments of $2,000, $2,500, $3,000, and

02.05-PR032 An easy payment plan offered by a local electronics store for your new audio system calls for end-of-year payments of $2,000, $2,500, $3,000, and

$3,500 at the ends of years 1 through 4 respectively. Your money is well invested and earns a consistent 10% per year.

a. What is the present worth of these payments?

b. If you prefer to make equal annual payments having the same present worth, how much would they be?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock