Arithmetic Gradient

2.25 Profits from recycling paper, cardboard, aluminum, and glass at a liberal arts college
have increased at a constant rate of $1100 in each of the last 3 years. If this years profit
(end of year 1) is expected to be $6000 and the profit trend continues through year 5, (a)
what will the profit be at the end of year 5 and (b) what is the present worth of the profit at
an interest rate of 8% per year?
2.26 A report by the Government Accountability Office (GAO) shows that the GAO expects
the U.S. Postal Service to lose a record $7 billion at the end of this year, and if the business
model is not changed, the losses will total $241 billion by the end of year 10. If the losses
increase uniformly over the 10-year period, determine the following:
(a) The expected increase in losses each year
(b) The loss 5 years from now
(c) The equivalent uniform worth of the losses at an interest rate of 8% per year
2.27 Rolled ball screws are suitable for high-precision applications such as water jet cutting.
Their total manufacturing cost is expected to decrease because of increased productivity, as
shown in the table. Determine the equivalent annual cost at an interest rate of 8% per year.

2.28 Western Hydra Systems makes a panel milling machine with a 2.7-m-diameter milling
head that emits low vibration and processes stress-relieved aluminum panels measuring up
to 6000 mm long. The company wants to borrow money for a new production/warehouse
facility. If the company offers to repay the loan with $60,000 in year 1 and amounts
increasing by $10,000 each year through year 5, how much can the company borrow at an
interest rate of 10% per year?
2.29 GKX Industries expects sales of its hydraulic seals (in inch and metric sizes) to increase
according to the cash flow sequence $70 + 4k, where k is in years and cash flow is in $1000.
(a) What is the amount of the cash flow in year 3?
(b) What is the future worth of the entire cash flow series in year 10? Let i = 10% per
year.
2.30 For the cash flows below, determine the amount in year 1, if the annual worth in years
1 through 9 is $601.17 and the interest rate is 10% per year.

2.31 Apple Computer wants to have $2.1 billion available 5 years from now to finance
production of a handheld electronic brain that, based on your behavior, will learn how to
control nearly all the electronic devices in your home, such as the thermostat, coffee pot,
TV, and sprinkler system. The company expects to set aside uniformly increasing amounts of
money each year to meet its goal. If the amount set aside at the end of year 1 is $50 million,
how much will the constant increase G have to be each year? Assume the investment
account grows at a rate of 18% per year.

2.32 Tacozza Electric, which manufactures brush dc servomotors, budgeted $75,000 per
year to pay for certain components over the next 5 years. If the company expects to spend
$15,000 in year 1, how much of a uniform (arithmetic) increase each year is the company
expecting in the cost of this part? Assume the company uses an interest rate of 10% per
year.