Questions

Question:

Pop Quiz: Oct 17th
f_lineargradim_5d04d2b.png

Using the linear gradient above, find the present worth and future worth with a 0% interest rate.

Answer:

(1)
\begin{equation} Present worth = 15 \end{equation}
(2)
\begin{equation} Future Worth = 15 \end{equation}

With a 0% interest rate we simply add the values from all periods together, yielding 15. Or, we could conduct PW and FW calculations, both yielding 15.

(3)
\begin{equation} Present Worth = 0/1 + 1/1^2 + 2/1^3 + 3/1^4 + 4/1^5 + 5/1^6 = 15 \end{equation}
(4)
\begin{equation} Future Worth = 0(1)^6 + 1(1)^5 + 2(1)^4 + 3(1)^3 + 4(1)^2 + 5(1) = 15 \end{equation}
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