Gradients Series

Try to solve:

Problem 1:

A second-hand motorcycle can be purchased by 5 end-of-month payments. The first payment would be
5000 and would increase by 500 every payment. Should a buyer opt to pay it at once rather than by
installments, how much would it cost him if money is worth 6% compounded quarterly?

Ans. P26, 589.8

Problem 2:

A loan was to be amortized by a group of four end-of-year payments forming an ascending arithmetic
progression. The initial payment was to be P 5,000 and the difference between successive payments was
to be 400. But the loan was renegotiated to provide for the payment of equal rather than uniformly
varying sums. If the interest rate of the loan was 15%, what was the annual payment?

Ans. P5,530.51

Problem 3:

Find the equivalent annual payment of the following obligations at 20% interest.

End of year Payment

1 8,000

2 7,000

3 6,000

4 5,000

Ans. P6,725.77

Problem 4:

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 P120,000 at the end of the first year and you have to
increase that payment by P30,000 per year for the next remaining years until the end of the 3 rdyear, how
much is the present worth of the machine if the company charges 12% annual interest?

Ans. P354,842.38