Question

A uniform gradient cash flow contains a first payment of $500 at the end of the first year, $600 payment at the end of the second year, $700 payment at the end of the third year, $800 payment at the end of the fourth year, and so on. There are a total of 15 payments. The annual interest rate is 8%. Determine: (a) the present, (b) the future, and (c) the uniform annual amounts that are equivalent to the cash flow.

Answer 1

Total Future value	28766.199
Total Present value	$16,060.72
Uniform annual amount	$1,876.37

Workings

Year	Cash flow	Future value
1	500	1468.60
2	600	1631.77
3	700	1762.72
4	800	1865.31
5	900	1943.03
6	1000	1999.00
7	1100	2036.02
8	1200	2056.59
9	1300	2062.94
10	1400	2057.06
11	1500	2040.73
12	1600	2015.54
13	1700	1982.88
14	1800	1944.00
15	1900	1900.00

Calculations