Exercise

Bill paid $$2000$ for a computer $5$ years ago. Bill needed his computer for his daily business follow up$.$ Now Bill decides to invest $($to give a customer a loan$)$ an amount of money, $P,$ for $15$ years at an interest rate $i=10\%$ per year. He agreed to get his money back annually starting with an initial amount of $$500$ at the end of year $3.$ The plan is to increase this annual amount by $$100.$ At the end of years $3$ and $5$ Bill has to pay $$750$ as personal expenses.

a$)$ Draw the cash flow diagram $($for Bill's investment$)$ neatly and labeled with all necessary cash flows

b$)$ Calculate the invested amount of money, P$.$

c$)$ What will be the invested money, $P,$ if the annual increase of the $$100$ is replaced by an increase at a uniform rate, $g,$ of $10\%$ per year