Understanding Economic Gradients
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ScribdTranslationsUnderstanding Economic Gradients
Translated by
ScribdTranslationsEconomic Engineering
TOPICS :
ARITHMETIC OR LINEAR GRADIENT
GEOMETRIC GRADIENT OR
EXPONENTIAL
Definition of Gradients
Periodic payments that have a formation law are called gradients. This law
it refers to the fact that payments may increase or decrease, in relation to the previous payment, by
a constant amount in pesos or as a percentage.
For a series of cash flows to be considered a gradient, they must meet the following
conditions:
Cash flows must have a formation law.
Cash flows must be periodic.
Cash flows must have an equivalent present and future value.
The number of periods must be equal to the number of cash flows.
A flowchart shows a series of gradient payments, illustrated below:
Example:
A debt being paid off with 6 monthly installments, which increase by $5,000 each month.
the value of the first installment is $100,000. If the interest rate charged on the operation
It is a monthly rate of 3%, calculate the initial value of the debt.
The cash flow is as follows.
FORMULA
,
GRADIENT
ARITHMETIC OR LINEAR
An arithmetic (G) or uniform gradient is a series of cash flows that increases or
decreases uniformly. That is to say, the cash flow, whether income or disbursement,
It changes by the same amount each year. The amount of increase or decrease is the gradient.
types of arithmetic gradients
When the constant amount is positive, the arithmetic gradient is generated.
growing. When the constant quantity is negative, the gradient is generated.
decreasing arithmetic.
If a series of increasing linear gradient is compared with the gradient series
decreasing linear leads to the conclusion that the only difference that the
characterizes G as the sign for the increasing linear gradient is positive and for the
decreasing linear gradient is negative.
For example, if a debt is being paid off with monthly installments that
They increase by $5,000 each month; the series of payments forms a linear gradient.
rising. If the payments decrease by $5,000 each month, their set constitutes
a decreasing linear gradient.
Increasing Linear Gradient
Present value of the increasing linear gradient
It is a value located in the present that results from summing the present values of a
series of payments that increase by a constant amount (G) each period.
Example
The value of a rice processing machine is being paid off in 24 installments.
monthly, which increase by $10,000 each month, and the value of the first installment is
$150,000. If the interest rate being charged is 3% per month, calculate the
value of the machine.
Equivalent to cancel today $4250 042.13
to cancel 24 monthly payments, that
increase by $10,000 each month, being the
first payment of $150,000, at a rate of
, , 3% monthly interest.
Future Value of Increasing Linear Gradient
It consists of calculating a future value equivalent to a series of periodic payments.
that increase a constant amount in pesos each period.
Example
In a corporation that recognizes a quarterly interest rate of 9%, they make
quarterly deposits, which increase by $100,000 each quarter, for 9 years. YES
the value of the first deposit is $500,000, calculate the accumulated value at the end of
ninth.
, ,
Decreasing linear gradient
Present Value of Decreasing Linear Gradient
It is a value located in the present equivalent to a series of periodic payments that have
the characteristic of decreasing each one in relation to the previous one is a constant amount of
money (G)
Example
A home is being paid off with 180 monthly installments that decrease in
$10,000 every month, with the first payment of $3,015,896.71. If the rate of
the financing being charged is 3% monthly, calculate the value of the
housing.
For this example, the fees decreased by
$10,000 every month. If the first payment is a,
the second month's fee will be a-10,000, the third
the fee will be a-20,000, the fourth fee will be a-
30,000 and the nth installment will be a - (n - 1)g.
The value of installment number 180 is: n=A-(n-1)G
Quota 180 = 3,015,896.71 - (180-1)*10,000
Quota 180= $ 1,225,896.71
, ,
Future Value of Decreasing Linear Gradient
The future value F of this series is constituted by a single future payment that
find in N, where the last payment occurs and is equivalent to the gradient series
that decrease in a value expressed in pesos of value G, between the installments
successive.
GEOMETRIC GRADIENT OR
EXPONENTIAL
A geometric gradient refers to a series of periodic payments such that
each one is equal to the previous one decreased or increased by a percentage
fixed.
Formation Law
Considering that the payments in each period will be different, then they will
they will be identified with a subscript indicating the sequential number of the payment.
According to the formation law, in this case, each payment will be equal to the previous one.
multiplied by a constant, as shown below:
TYPES OF GRADIENTS
GEOMETRIC GRADIENT
growing
Present value of an increasing geometric gradient
It is a value situated in the present equivalent to a series of periodic payments.
which each increase with respect to the previous one is a fixed percentage.
Example
A debt is being settled through the payment of an initial fee of $
5,000,000 and 24 monthly installments that increase by 5% each month. If the value of
The first installment is $1,500,000 and an interest rate of 4% is charged.
monthly, Calculate:
The value of the obligation
The value of fee 22
, ,
, ,
Future value of an increasing geometric gradient
The future value of a geometric gradient is a value located at the date of
last payment or income equivalent to a series of periodic payments that grow
each period at a constant percentage (j).
The overall cash flow of an increasing geometric gradient is shown
in the following diagram:
Example
Calculate the future value equivalent to 12 payments that increase by 2.0% each month.
if a fee of 3% is charged monthly, with the first payment of $2,000,000.
The cash flow corresponds to an increasing geometric gradient, in which the
the first installment (A) has a value of $2,000,000, each installment increases with respect to
the previous fee at a monthly rate of 2.0% and the interest rate of the operation
the financial rate is 3% per month.
, ,
Decreasing Geometric Gradient
Present value of a decreasing geometric gradient
The present value of a decreasing geometric gradient is a value located at a
period prior to the date of the first payment, equivalent to a series of payments or
income that decreases periodically by a fixed percentage (j).
Future value of a decreasing geometric gradient
It is a future value equivalent to a periodic series of payments or income
which decrease by a fixed percentage. The future value of this series is
located on the date of the last payment or income.
Example
Calculate the amount that will be saved in a financial institution if one makes
six deposits that decrease by 1% each month, the first deposit is
$2,000,000 and a monthly interest rate of 2% is recognized.
The cash flow of the period corresponds to a geometric gradient.
decreasing, in which:
, ,