For the use of space, a warehouse owner has been offered the following contract: Year 1: $1,000 at the beginning of year 1 plus $5,000 at the end of year 1.Years 2 to 6: $5,000 per year (end-of-year payments) for years 2 to 6.
Years 7 to 15: $6,000 for year 7 and for the following years, an increase of $1000/year (end of year payments) (i.e. year 7 payment will be $6,000, for year 8 the payment will be $7,000, etc.).

If the warehouse owner can earn 6% per year on the money:
(i) What is the present worth of payments to be received for years 1 to 6? 

(ii) What is the present worth of payments to be received for years 7 to 15?

Answer rating: 100% (QA)

G1000 3000 2000 2000vr 0 1 6 7 15 Years i Yea... View the full answer