Question

An arithmetic cash flow gradient series equals $650 in year 1, $750 in year 2, and...

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 i = 9% per year, determine the present worth of the cash flow series in year 0.

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Answer #1

Present worth of the linear gradient = 650 (P/A, 9%, 10) + 100 (P/G, 9%, 10)

= 650 * 6.4177 + 100 * 24.3728

= 6608.79

Hence, the present worth of the cash flow series in year 0 is $6,608.79

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