Lecture no07 equal payment series

Interest Formulas – Equal Payment Series Lecture No Chapter Contemporary Engineering Economics Copyright © 2016 th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Equal Payment Series F nt Fut Equivale th ure Wor A A N A P N Equivalent Present Worth th Contemporary Engineering Economics, edition Park N Copyright © 2016 by Pearson Education, Inc All Rights Reserved Equal-Payment Series Compound Amount Factor • th Contemporary Engineering Economics, edition Park Formula Copyright © 2016 by Pearson Education, Inc All Rights Reserved An Alternate Way of Calculating the Equivalent Future Worth, F F A A(1+i) A A N-2 A A(1+i) th Contemporary Engineering Economics, edition Park N N-1 N Copyright © 2016 by Pearson Education, Inc All Rights Reserved Example 3.11: Uniform Series: Find F, Given i, A, and N  Given: A = $3,000, N = 10 years, and i = 7% per year  Find: F th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Solution  th Contemporary Engineering Economics, edition Park Excel Solution Copyright © 2016 by Pearson Education, Inc All Rights Reserved Example 3.12: Handling Time Shifts: Find F, Given i, A, and N  Given: A = $3,000, N = 10 years, and i = 7% per year where the first deposit is made at n = Find: F th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Solution Excel Solution: o Each payment has been shifted to one year earlier, thus each payment would be compounded for one extra year th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Sinking-Fund Factor: Find A, Given i, A, and F F A A th Contemporary Engineering Economics, edition Park A N N Copyright © 2016 by Pearson Education, Inc All Rights Reserved Example  Given: F = $5,000, N = years, and i = 7% per Formula to use year  Find: A A = $5,000( A / F ,7%,5)  Excel Solution = $869.50 $5,000 =PMT(7%,5,0,5000) A th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Example 3.14: Comparison of Three Different Retirement Plans Given: Three investment plans and i = 8%  Find: Balance on 65th birthday th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Solution th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved How Long Would It Take to Save $1 Million? th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Example 3.16: Deferred Loan Repayment  Given: P = $250,000, N = years, and i = 8% per year, but the first payment occurs at the end of year  Find: A th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Solution • Step Find the equivalent amount of borrowing at the end of year 1: • Step Use the capital recovery factor to find the size of the annual installment: th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Example 3.17: Uniform Series: Find P, Given A, i, and N  Given: A = $9,791,667, N = 30 years, and i = 5% per year  Find: P th Contemporary Engineering Economics, edition Park Present Worth Factor Copyright © 2016 by Pearson Education, Inc All Rights Reserved Solution Formula to use: Cash Flow Diagram  Excel Solution th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved .. .Equal Payment Series F nt Fut Equivale th ure Wor A A N A P N Equivalent Present Worth th Contemporary... Economics, edition Park N Copyright © 2016 by Pearson Education, Inc All Rights Reserved Equal- Payment Series Compound Amount Factor • th Contemporary Engineering Economics, edition Park Formula... Education, Inc All Rights Reserved Solution Excel Solution: o Each payment has been shifted to one year earlier, thus each payment would be compounded for one extra year th Contemporary Engineering