Module 1 : Engineering Economics

Lecture 7 : Arithmetic gradient

Now one cane easily find out the present worth, future worth and equivalent uniform annual worth of the cash flow shown in Fig. 1.15a (a positive uniform gradient with base value ‘B' and the gradient ‘G') by taking the sum of the corresponding values from the uniform series with uniform annual amount ‘B' i.e. base value and the gradient series with values in multiples of gradient amount ‘G'. Similarly the present worth, future worth and equivalent uniform annual worth of a cash flow involving a negative uniform gradient can be calculated by subtracting the corresponding values of the gradient series (with values in multiples of gradient amount ‘G') from the uniform series with uniform annual amount ‘B' i.e. base value as shown Fig. 1.18a and Fig. 1.18b.

Fig 1.18a Generalized Cash flow diagram involving a negative uniform gradient with ‘unknown F'=


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Fig 1.18b Cash flow diagram (negative uniform gradient) for ‘unknown F'