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3. A geometric gradient that increases at g = 6% per year for 15 years is shown in the accompanying diagram. The annual interest rate
3. A geometric gradient that increases at g = 6% per year for 15 years is shown in the accompanying diagram. The annual interest rate is 12%. What is the present equivalent value of this gradient? $500(1.064 $500(1.06) $500 0 1 2 14 15 Years 4. It is likely that your college tuition will increase an average of 8% per year for the next 4 years. The annual cost of tuition at the beginning of your freshman year in college will be $12,000 (A1). How much money will you and your parents have to deposit in a mutual fund account one year prior to your freshman year to pay for your tuition for the 4 years you will spend earning your degree in engineering? The mutual fund will earn an average of 5% annual interest. 5. Determine the present worth of a maintenance contract that has a cost of $30,000 in year 1 and annual increases of 6% per year for 10 years. Use an interest rate of 6% per year
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