Question FM 11/19/2011 08:36

John receives payments at the start of each of the next 10 years. The first payment is 1000, which is paid now.
The payments from then on increase at a rate effective rate of $15\%$ each year.
Using an annual effective rate on interest of $23.05\%$, find the present value of these payments at time 0.

Ans: $1000.\frac{1-(1.07)^{-10}}{\frac{0.07}{1.07}}$