Determine the equivalent annual worth for years 1 through 10 of a uniform series of payments of $20,000 that begins in year 3 and ends in year 10. Use an interest rate of 10% per year. Also, write the single-cell spreadsheet function to find A.
What will be an ideal response?
Find F in year 10 and then convert to A in years 1-10
F = 20,000(F/A,10%,8)
= 20,000(11.4359)
= $228,718
A = 228,718(A/F,10%,10)
= 228,718(0.06275)
= $14,352
Spreadsheet function: = PMT(10%,10,,FV(10%,8,20000))
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