ARITHMETIC AND

GEOMETRIC GRADIENT
SERIES
 ARITHMETIC
GRADIENT
1 SERIES
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From Table of Interest Factors:

(P/A,12%,5) = 3.6048
(P/G,12%,5) =6.3970

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P = P1 + P2
= 2 (P/G, 8%, 5) + 50 (P/A, 8%,5)
= 2 (7.3724) + 50 (3.9927)
= 214.37 K
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P = 54 (P/A, 8%,5)
= 54 ( 3.9927)
= 215.61 K
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 𝑨𝒏 − 𝑨𝒎
G=
𝒏 −𝒎

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 (P/A, 10%,10) = 6.1446 (P/G,10%,10) = 22.8913

1 The Texas Highway Department expects the cost of

maintenance for a particular piece of heavy equipment to be
$5000 in year 1, $5,500 in year 2, and amounts increasing by
$500 through year 10. At an interest rate of 10% per year,
the present worth of the maintenance cost is nearest to:
(A) $38,220 (B) $42,170 (C) $46,660 (D) $51,790

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 (A/G, 12%, 8 ) = 2.9131

2 The cash flow associated with a strip mining operation

is expected to be $200,000 in year 1, $180,000 in year 2,
and amounts decreasing by $20,000 per year through 8.
At an interest rate of 12% per year, the equivalent annual
cash flow is nearest to:

(A) $61,970 (B) $142,738 (C) $185,070 (D) $261,970

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3

(P/A, 5%, 10) = 7.7217

(P/G, 5%, 10) = 31.652
(A/G,5%,10) = 4.0991
(A/P,5%,10) = 0.12950

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2 GRADIENT
SERIES