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Arithmetic Gradient Series 2223

The document discusses arithmetic gradient series, which are cash flow series where the amounts increase uniformly over time rather than being a constant amount. It explains that an arithmetic gradient series can be resolved into two components: a uniform series and a gradient series, where the gradient is the change from period to period. It notes that resolving it this way sets the first cash flow to zero so that the gradient is the change between periods. The document then states that it will derive an equation to find the present worth of an arithmetic gradient series based on the gradient amount G rather than a uniform amount A.

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Lucy Calilan
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162 views10 pages

Arithmetic Gradient Series 2223

The document discusses arithmetic gradient series, which are cash flow series where the amounts increase uniformly over time rather than being a constant amount. It explains that an arithmetic gradient series can be resolved into two components: a uniform series and a gradient series, where the gradient is the change from period to period. It notes that resolving it this way sets the first cash flow to zero so that the gradient is the change between periods. The document then states that it will derive an equation to find the present worth of an arithmetic gradient series based on the gradient amount G rather than a uniform amount A.

Uploaded by

Lucy Calilan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ARITHMETIC

GRADIENT SERIES
Engr. Antonio Carmelito Lizada
ARITHMETIC GRADIENT

It frequently happens that the cash flow series is not


of constant amount A. Instead, there is a uniformly
increasing series as shown:
• Cash flows of this form may be resolved into two
components:
• Note that by resolving the problem in this manner, the first
cash flow in the arithmetic gradient series becomes zero.
This is done so that G is the change from period to period,
and because the gradient (G) series normally is used
along with a uniform series (A). To find an equivalent
present worth, we already have an equation for (P/A, i, n),
and we need to derive an equation for (P/G, i, n). In this
way, we will be able to write
Derivation of Arithmetic Gradient
Factors
• The arithmetic gradient is a series of increasing cash
flows as follows:
• The arithmetic gradient series may be thought of as a
series of individual cash flows that can individually be
converted to equivalent final cash flows at the end of
period n.

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