Lecture no12 equivalence calculations with continuous payment

Equivalence Calculations with Continuous Payments Lecture No.12 Chapter Contemporary Engineering Economics Copyright © 2016 th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Single-Payment Transactions with Continuous Compounding: Future Worth F N P th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Practice Problem If you invest $1,000 in a savings account that pays 6% annual interest compounded continuously, what would be the balance at the end of years? F =? $1,000 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 Single-Payment Transactions with Continuous Compounding: Present Worth F N P th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Continuous-Funds Flow th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Summary of Interest Factors for Typical Continuous Cash Flows with Continuous Compounding th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Example 4.10: Continuous Flows and Continuous Compounding  Given: A = $200 per day, r = 6% per year, M = 365 compounding periods per year, and N = 455 days  Find: F Note: A 15-month period is 1.25 years 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 Example 4.11: Continuous Flows and Continuous Compounding  Given: A = $200 per day, r = 6% per year, M = 365 compounding periods per year, and N = 455 days  Find: F Note: A 15-month period is 1.25 years th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Solution • Find G: th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Solution • Find P: th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved ... Single -Payment Transactions with Continuous Compounding: Present Worth F N P th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Continuous- Funds... Typical Continuous Cash Flows with Continuous Compounding th Contemporary Engineering Economics, edition Park Copyright © 2016 by Pearson Education, Inc All Rights Reserved Example 4.10: Continuous. ..Single -Payment Transactions with Continuous Compounding: Future Worth F N P th Contemporary Engineering Economics, edition