Gradient Series of Cash

Flows

UNIFORM GRADIENT SERIES OF CASH FLOWS

Arithmetic gradient series is a series of
payments in which each payment is greater
than or less than previous
one by a
constant amount
GEOMETRIC SERIES OF CASH FLOWS
Geometric gradient series is series of
payments where annual payments increase
or decrease over time, by a constant
percentage.

1. Find the value of each of the

following:
a. (A/G, 14.5%,23)
b. (P/G, 12%,10)
c. (F/G,7.8%,21)
2. Compute for the present value
50

10
0

150

0
0

i=
10%

3. Compute the value of the amount of F

200
50
0

100

15
0

i=
10%

4. Compute the value of the amount of A

300
100

20
0

400

0
0

i=
10%

5. For the gradient series shown below,

compute for the values of P and F and
the value of A
500

45
0

2
i= 10%

400

35
0

300

25
0

6. Suppose a man receives an initial annual

salary of $60,000, increasing at the rate of
$5,000 a year. If money is worth 10%,
determine his equivalent uniform salary for
the period of 8 years.

7. Deposit are made to an account as

indicated below which bears interest at the
rate of 10% compounded annually. How
much will there be in the account the end
of the sixth year?
End of year

Deposit

P0

500

1000

1500

2000

8. An increasing annual uniform series begins at

the end of second year

and ends after

fifteenth year. What is the value of gradient G

that makes the gradient series equivalent to a
uniform flow of payments of Php 900 per year
for seven years at 12% per year compounded
annually?

Geometric Gradient
The rate of increase is (1+r )

1. For the cash flow shown below, find the values of

present and future if i = 12% per year
1000 1100

1210

r = 10% i= 12%

1331

1464.10

2. For the cash flow shown below, find the values

of present and future if i = 12% per year
3000

2250

1687.50

1265.63
949.22

711.91

533.94

400.45
8

3. Annual maintenance cost for the machine

are 1,500 this year and estimated to increase
10% each year every year. What is the
present worth of the maintenance cost for 6
years if i= 8%

4.

Lovely a 3rd year student of Industrial Engineering

Department in Adamson University with a age of 18
years old makes year end deposit of Php 500 for the
first year, P 550 on the 2nd year, P 605 on the 3rd year
and so on, increasing the next years deposit by 10%
of the deposit by the preceding year until the end of
tenth year. Desiree makes equal year end deposits of
700 each year for 10 years. If interest on both funds is
12% compounded annually, who will be able to save
more at the end of 10 years?

5. On Domingos 23rd birthday you decide to invest

$4,500 (10% of your annual salary) in a mutual
fund earning 7% per year. You will continue to
make annual deposits equal to 10% of your
annual salary until you retire at age 62 (40 years
after you started your job). You expect your salary
to increase by an average of 4% each year during
this time. How much money will you have
accumulated in your mutual fund when you retire?