(4-5)Uniform series with middle of period cash flows:

When assumed the cash flow occur at the middle of each time period, the interest factors
multiplied by "Half-period correction" factor.
i.e: when (i) is the effective interest rate per period the half – period correction (HPC) is
applied to interest factors in Appendix.
HPC=

  F4

0 1 2 3 4 5
Example:
The figure below is cash flow diagram of annually consisting of 4 middle of year amounts of 200 $. If (i) per year =
10% . Determine:
a) The present worth of the uniform series at the beginning of the first year?
b) The equivalent future worth at the end of the fourth year?
 Sol.
P0 = ?
a) 200
F4 = ?
P-1/2 200 200 200
P-1/2 = 200 633.98$
P0= P- (HPC) = 633.98
- 1/2 1
= 633.98 * 1.048 = 664.92 $ 0 2 3 4

b)
F4 = A (F/A, 10 %, 4) (HPC)
F = A [ *(HPC)
= 200(4.641) (1.048) = 973.5 $
Example:
If 1500 $ is to be received at the end of 5 years when i per year is 15 %. What middle –of –year uniform amount
would be equivalent to this future amount?

 Sol.
F4 (HPC) = F5
HPC = = 1.0724
A = F4 [ ]
 
A = (0.1483) = 207.43 $
 
(4-6)Uniform Gradient Series:-
The uniform gradient cash flow series which either increase or decrease
 

1 2 3 n
0

g1 g
2 g3
P

(n-1)g

That means the cash flow either is increased or decreased (cost)

changes by the same amount each year which is called the
(gradient).
 
 R*= [ ]

A1
  Increasing Gradient A2

A= A1+ R*

A1+ R* A1+ R*
When we have decreasing gradient: -

A2

decreasing Gradient
A1
 

A=A1- R*

A1- R* A1- R*

  In special case

A= [ ]
Example:
What is the equivalent annual payment to an amount paid at the end of the first year 100 $ , and increasing
uniformly by 10 $ for each year to period of 15 years with interest =12% ?

n = 15 , I = 12%

A1=100 $
  G = 10 $

R*= [ ] =] 4.9803
= 49.8 $
A + R*= 100 + 49.8 = 149.8 $
 
A1+ R*  
Example:
If the maintenance cost for a machine at the 1 st year is 200 $ and at the 2nd year is 250 $. And at the 3rd
year is 300$, at the 4th year is 350 $, at the 5th year is 400 $. Find the uniform average for the annual
maintenance cost when i= 5%?
Sol.

 R* = - [ ] = 95.12$
A1 + R* = 200 + 95.12 = 295.12$