Question

The present worth of income from an investment that follows an arithmetic gradient is projected to be $475,000. The income in year one is expected to be $25,000. What is the gradient each year through year 6 at an interest rate of 10% per year?
I found this on another site:
475,000 = 25,000(P/A,10%,6) + G(P/G,10%,6)
475,000 = 25,000(4.3553) + G(9.6842)
9.6842G = 366,117.50
G = $37,805.65

Answer 1

Answer:

G = $37,805.65

Explanation:

I found this on another site:

475,000 = 25,000(P/A,10%,6) + G(P/G,10%,6)

475,000 = 25,000(4.3553) + G(9.6842)

9.6842G = 366,117.50

G = $37,805.65