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What is the equivalent amount in year ten of an expenditure of $5,000 in year one, $6,000 in year two, and amounts increasing by $1,000 per year through year ten?

User MoonMist
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1 Answer

4 votes

Answer:

The correct answer is the equivalent amount is $139,059.41

Explanation:

According to the scenario, the computation of the equivalent amount in year ten is shown below;

= $5,000 × (P/A, 10%,10) + $1,000 × (P/G, 10%,10)

= $5,000 × 6.1466 + $1,000 × 22.8913

= $30,723 + $22,891.30

= $53,614.30

Now the equivalent amount is

= $53,614.30 × (F/P, 10%,10)

= $53,614.30 × 2.5937

= $139,059.41

Hence, the equivalent amount is $139,059.41

User Scott Marlowe
by
8.7k points

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