The Pedernales Electric Cooperative estimates that the present worth now of increased revenue from an investment in renewable energy sources is $12,475,000. There will be no new revenue in years 1 or 2, but in year 3 revenue will be $250,000, and thereafter it will increase according to an arithmetic gradient through year 15. What is the required gradient, if the expected rate of return is 15% per year? Solve
What will be an ideal response?
(a) Using tabulated factors
12,475,000(F/P,15%,2) = 250,000(P/A,15%,13) + G(P/G,15%,13)
12,475,000(1.3225) = 250,000(5.5831) + G(23.1352)
G(23.1352) = 15,102,413
G = $652,789
(b) Spreadsheet solution using Goal Seek
 ANSWER.png)
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