Chapter 5 Spring 2010

# Chapter 5 Spring 2010 - CHAPTER 5 Arithmetic Gradients, G:...

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CHAPTER 5 Arithmetic Gradients, G: The Constant Increment to a series of Periodic Payments F/G, G/F “F given G, G given F” P/G, G/P “P given G, G given P” A/G, G/A “A given G, G given A”

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HW Due on 02/04/10 Chapter 5 B.2 D.6 E.2 F.1 * part b) will not be graded but you might want to see if you can work it. The answer is correct. F.4 G.2
CHAPTER OUTLINE Finding the Present Worth, Future Worth, or Equivalent Series from an Arithmetic Gradient Shifting Cash flow diagrams Manipulating interest rates Complex problems

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Equations – page 126 ( 29 - - + = n i i i G F n 1 1 n 2 i G P = ( 29 ( 29 ( 29 + - + - + = n n n i n i i i i G P 1 1 1 1 ( 29 - + - = 1 1 1 n i n i G A
Cash Flow Diagrams G G 2G 2G 3G 3G 4G 4G 5G 5G 0 0 1 1 2 2 3 3 4 4 5 5 6 6 G = 0 at time 1 Equation Time 0 is 2 PERIODS prior to the first G

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Cash Flow Diagrams P F A G G 2G 2G 3G 3G 4G 4G 5G 5G P is found 2 periods prior to the first G F is found at the same time as the last G The resulting A from a G starts one period prior to the G and ends at the same time as the G
Cash Flow Diagrams 0 0 1 1 2 2 3 3 4 4 5 5 6 6 When G A (First value no equal to G) G’s are broken into “A’s” and “G’s” A A G G 2G 2G 3G 3G 4G 4G

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Shifting Cash Flow Diagrams Gradients may or may not be set up to solve for P at t = 0. Renumbering is often needed Periodic Gradients often occur – as did periodic “A’s” in Chapter 4 The n’s must always match the i’s Correct drawing of cash flow diagrams becomes very important
Example 600 500 700 800 900 1000 1100 1200 1300 0 1 2 3 4 5 6 7 8 9 What is A? What is G?

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## This note was uploaded on 02/07/2011 for the course CGN 4101 taught by Professor Wise during the Spring '08 term at University of Florida.

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Chapter 5 Spring 2010 - CHAPTER 5 Arithmetic Gradients, G:...

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