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Arithmetic & Geometric Gradients Examples

The document contains two examples describing maintenance costs that increase or decrease over time. Example 4 describes machine maintenance costs that increase by $35 each year for 8 years, starting at $155 in the first year. It asks what present sum is needed to pay for the 8 years of maintenance assuming 6% interest. Example 5 asks to determine the uniform annual maintenance cost from Example 4. Example 7 describes a geometric gradient that starts at $1,000 and decreases by 20% each year, and asks to determine the present value (P), annual payment (A), and future value (F) assuming a 25% interest rate.

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Cyrus wendell P. De sosa
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102 views2 pages

Arithmetic & Geometric Gradients Examples

The document contains two examples describing maintenance costs that increase or decrease over time. Example 4 describes machine maintenance costs that increase by $35 each year for 8 years, starting at $155 in the first year. It asks what present sum is needed to pay for the 8 years of maintenance assuming 6% interest. Example 5 asks to determine the uniform annual maintenance cost from Example 4. Example 7 describes a geometric gradient that starts at $1,000 and decreases by 20% each year, and asks to determine the present value (P), annual payment (A), and future value (F) assuming a 25% interest rate.

Uploaded by

Cyrus wendell P. De sosa
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 PPTX, PDF, TXT or read online on Scribd
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Arithmetic Gradient

Example 4 as Assignment # 1.1 (Mid)


The maintenance of the machine is expected to be $155 at the end of
the first year and increasing $35 each year for the following seven
years. What present sum of money would need to be set aside now
to pay the maintenance for the eight-year period? Assume 6%
interest.
Example 5 as Assignment # 1.2 (Mid)
We wish to know the uniform annual maintenance cost at Example
4. Compute an equivalent A for the maintenance cost.
Geometric Gradient
Example # 7 as Seatwork # 1.2 (Mid)
Suppose that the geometric gradient in Example 6 begins with
$1,000 at EOY one and decreases by 20% per year after the first
year. Determine P, A, and F under this condition. i = 25%

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