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Example #1: Suppose a man receives an initial salary of ₱ 60 000.00, increasing at the
rate of ₱ 5 000.00 a year. If money is worth 10%, determine his equivalent uniform salary
for a period of 8 years.
Example #1: Suppose a man receives an initial salary of ₱ 60 000.00, increasing at the
rate of ₱ 5 000.00 a year. If money is worth 10%, determine his equivalent uniform salary
for a period of 8 years.
⎛ n ⎞ ⎛ n ⎞
⎜ (
(1 + i)
) - 1 ⎟ G ⎜ (
(1 + i)
) -1
F = A ――――+ ― ―――― - n⎟
⎜⎝ i ⎟⎠ i ⎜⎝ i ⎟⎠
⎛ 8 ⎞ ⎛ 8 ⎞
⎜ (
(1 + 0.10 )
) - 1 ⎟ 5000 ⎜ (
(1 + 0.10 )
) -1
F ≔ 60000 ―――――+ ―― ――――― - 8⎟
⎜⎝ 0.10 ⎟⎠ 0.10 ⎜⎝ 0.10 ⎟⎠
F = 857947.691 pesos
⎛ n ⎞
⎜ ((1 + i)) - 1 ⎟
F = A ――――
⎜⎝ i ⎟⎠
⎛ i ⎞
A = F ⎜―――― n ⎟
⎜⎝ ((1 + i)) - 1 ⎟⎠
⎛ 0.10 ⎞
A ≔ 857947.691 ⎜――――― 8 ⎟
⎜⎝ ((1 + 0.10)) - 1 ⎟⎠
A = 75022.393 pesos
Example #2: For the gradient series shown, compute the future and present worth
for the equivalent uniform series.
⎛ n ⎞ ⎛ n ⎞
⎜ ((1 + i)) - 1 ⎟ G ⎜ ((1 + i)) - 1
F = A ――――- ― ―――― - n⎟
⎜⎝ i ⎟⎠ i ⎜⎝ i ⎟⎠
⎛ 6 ⎞ ⎛ 6 ⎞
⎜ ((1 + 0.10)) - 1 ⎟ 50 ⎜ ((1 + 0.10)) - 1
F ≔ 500 ―――――- ―― ――――― - 6⎟
⎜⎝ 0.10 ⎟⎠ 0.10 ⎜⎝ 0.10 ⎟⎠
F = 3000 pesos
-n
P = F ((1 + i))
-6
P ≔ 3000 ((1 + 0.10))
P = 1693.422 pesos
Example #3: A certain machine purchased today shall be paid in 3 annual unequal
payments with no down payment. If the company agrees that the first payment is
₱ 120 000.00 at the end of the first year and you have to increase that payment by
₱ 30 000.00 per year for the next remaining years until the end of the 3rd year, how
much is the present worth of the machine if the company charges 12% annual
interest?
⎛ n ⎞ ⎛ n ⎞
⎜ ((1 + i)) - 1 ⎟ G ⎜ ((1 + i)) - 1
F = A ――――+ ― ―――― - n⎟
⎜⎝ i ⎟⎠ i ⎜⎝ i ⎟⎠
⎛ 3 ⎞ ⎛ 3 ⎞
⎜ ((1 + 0.12)) - 1 ⎟ 30000 ⎜ ((1 + 0.12)) - 1
F ≔ 120000 ―――――+ ――― ――――― - 3⎟
⎜⎝ 0.12 ⎟⎠ 0.12 ⎜⎝ 0.12 ⎟⎠
F = 498528 pesos
-n
P = F ((1 + i))
-3
P ≔ 498528 ((1 + 0.12))
P = 354842.383 pesos
PT = 354842.384 pesos
PT = 354842.384
Example #4: Eleanor makes year-end deposits of ₱ 500.00 the first year, ₱ 550.00 the
second year, ₱ 605.00 the third year, and so on, increasing the next year's deposit
by 10% of the deposit in the preceding year until the end of the tenth year. If
interest is 12% compounded annually, what is the total savings at the end of 10
years?
A ⎛ 1 - wn ⎞
P = ――⎜――― ⎟
1+i ⎝ 1-w ⎠