I\'m don\'t quite understand how to set a similar problem to this up in order to

Question

I'm don't quite understand how to set a similar problem to this up in order to solve it. A problem that is similar to the one I will have to do is a company is looking to spend 3,000,000 the 1st and 2nd year for advertising while the amounts increase 200,000 each year after the fourth ear over a seven year period. What is the present worth of the amount on advertising at an i rate of 15% a yr.

I'm thinking I need some type of shifted gradient series for years 3 through seven but not sure exactly how to set this up for the last half and the first half. Please do not only show the answer but how you got to it as the answer is ultimately unimportant as I just need to understand the concept of setting it up. Thanks for anyones help that can help me figure this out!

Explanation / Answer

12979188 answer

1 2 3 4 5 6 7 Advertising expenses 3000000 3000000 3000000 3000000 3200000 3400000 3600000 Disocutning rate 0.869565 0.756144 0.657516 0.571753 0.497177 0.432328 0.375937 Present value 2608696 2268431 1972549 1715260 1590966 1469914 1353373 Ttoal alue 12979188

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