An arithmetic cash flow gradient series equals 600 in year 1

An arithmetic cash flow gradient series equals $600 in year 1, $700 in year 2, and amounts increasing by $100 per year through year 10. At i= 11% per year, determine the present worth of the cash flow series in year? The present worth of the cash flow series in year O is $

Solution

Year Cash flows PVf @ 11% Present value 1 600 0.9009 540.541 2 700 0.81162 568.136 3 800 0.73119 584.953 4 900 0.65873 592.858 5 1000 0.59345 593.451 6 1100 0.53464 588.105 7 1200 0.48166 577.99 8 1300 0.43393 564.104 9 1400 0.39092 547.295 10 1500 0.35218 528.277 Present value of cash flows 5685.71