Arithmetic Gradient

1. Profits from recycling paper, cardboard, aluminum, and glass at a liberal arts
college have increased at a constant rate of Php1100 in each of the last 3
years. If this years profit (end of year 1) is expected to be Php6000 and the
profit trend continues through year 5, (a) what will the profit be at the end of
year 5 and (b) what is the present worth of the profit at an interest rate of 8%
per year?
2. Rolled ball screws are suitable for high-precision applications such as water
jet cutting. Their total manufacturing cost is expected to decrease because of
increased productivity, as shown in the table. Determine the equivalent
annual cost at an interest rate of 8% per year.
Year
Cost,
Php1000

200

195

190

185

180

175

170

165

3. Western Hydra Systems makes a panel milling machine with a 2.7-mdiameter milling head that emits low vibration and processes stress-relieved
aluminum panels measuring up to 6000 mm long. The company wants to
borrow money for a new production/warehouse facility. If the company offers
to repay the loan with Php2,700,000 in year 1 and amounts increasing by
Php450,000 each year through year 5, how much can the company borrow at
an interest rate of 10% per year?
4. Apple Computer wants to have $2.1 billion available 5 years from now to
finance production of a handheld electronic brain that, based on your
behavior, will learn how to control nearly all the electronic devices in your
home, such as the thermostat, coffee pot, TV, and sprinkler system. The
company expects to set aside uniformly increasing amounts of money each
year to meet its goal. If the amount set aside at the end of year 1 is $50
million, how much will the constant increase G have to be each year? Assume
the investment account grows at a rate of 18% per year.