# Question: 4a for the use of space a warehouse owner has...

###### Question details

4(a) For the use of space, a warehouse owner has been offered
the following contract: Year 1: $2,000 at the beginning of year 1
plus $2,000 at the end of year 1.

Years 2 to 6: $2,000 per year (end-of-year payments) for years 2 to
6.

Years 7 to 15: $3,000 for year 7 and for the following years, an
increase of $1000/year (end of year payments) (i.e. year 7 payment
will be $3,000, for year 8 the payment will be $4,000, etc.).

If the warehouse owner can earn 6% per year on the money:

(i) What is the present worth of payments to be received for years
1 to 6? (ii) What is the present worth of payments to be received
for years 7 to 15?