Problem 8 A An arithmetic cash flow gradient series equals $650 in year 1, $750 in year 2, and amounts increasing by $100 per year through year 10. At = 10% per year, determine the present worth of the cash flow series in year 0. Hint: What is the relation between gradient series and present worth? Solution: B For the cash flow revenues shown below, find the value of G that makes the equivalent annual worth in years 1 through 7 equal to $500. The interest rate is 9% per year. Hint: What is the relation between gradient series and annual worth? Year Cash flow, $ Year Cash flow, $ 0 4 125 + 3G 1 125 5 125 + 4G 2 125 +G 6 125 + 5G 3 125 + 2G 7 125 + 6G Solution: Problem 8 A An arithmetic cash flow gradient series equals $650 in year 1, $750 in year 2, and amounts increasing by $100 per year through year 10. At = 10% per year, determine the present worth of the cash flow series in year 0. Hint: What is the relation between gradient series and present worth? Solution: B For the cash flow revenues shown below, find the value of G that makes the equivalent annual worth in years 1 through 7 equal to $500. The interest rate is 9% per year. Hint: What is the relation between gradient series and annual worth? Year Cash flow, $ Year Cash flow, $ 0 4 125 + 3G 1 125 5 125 + 4G 2 125 +G 6 125 + 5G 3 125 + 2G 7 125 + 6G Solution