Posted by John on Monday, September 24, 2007 at 10:39am.
The football coach at the Midwestern university was given a 5yr employment contract that paid $22500 the first year and increased at an 8% uniform rate in each subsequent year. At the end of the first year's football season, the alumni agreed to buy his remaining years on the contract by paying him the equivalent present sum, computed using a 12% interest rate. How much will the coach receive?
How would I solve this, in step by step format.
?

Engineering Economy  economyst, Tuesday, September 25, 2007 at 9:44am
The coach could expect to receive over the next 4 years is:
225000*(1.08)+225000*(1.08)^2+225000*(1.08)^3+225000(1.08)^4
To get the present value, divide the first term by (1.12), the second term by (1.12)^2, the third by (1.12)^3, and the fourth by (1.12)^4
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