Question

Spreadsheets for Gradients What is the present worth of cash flows that begin at $10,000 and increase at 5% per year for 10 years? The interest rate is 12%.

Answer 1

Present Value = Future value/ ((1+r)^t)
where r is the interest rate that is 12% and t is the time period in years.
Present worth = sum of present values
The cash flows are increasing at 5% per year.
Year	0	1	2	3	4	5	6	7	8	9	10
cash flow	10000	10500	11025	11576.25	12155.06	12762.82	13400.96	14071	14774.55	15513.28	16288.95
present value	10000	9375	8789.063	8239.746	7724.762	7241.964	6789.342	6365.008	5967.195	5594.245	5244.605
sum of present values	81330.93
The present worth is $81330.93.