Академический Документы
Профессиональный Документы
Культура Документы
Chapter 2
Factors: How Time
and Interest Affect
Money
Slide Sets to
2-1
2005 by McGraw-Hill,
LEARNING OBJECTIVES
1. F/P and P/F
factors
5. Geometric
gradient
6. Calculate i
7. Calculate n
3. Interpolate for
factor values
8. Spreadsheets
Slide Sets to
2-2
2005 by McGraw-Hill,
Fn
i% / period
3
n-1
Slide Sets to
2-3
2005 by McGraw-Hill,
....
0
n-2
n-1
Find P
2-4
2005 by McGraw-Hill,
1
1
1
1
P A
..
1
2
n 1
n
(1
i
)
(1
i
)
(1
i
)
(1
i
)
Multiply by
(1)
1
to obtain a second equation
(1+i)
P
1
1
1
1
A
..
2
3
n
n 1
1 i
(1
i
)
(1
i
)
(1
i
)
(1
i
)
(2)
i
1
1
P A
n 1
1 i
(1
i
)
(1
i
)
Slide Sets to
2-5
(3)
2005 by McGraw-Hill,
(4)
(P/A,i%,n) factor
Excel: =PV(i%,n,A)
i (1 i ) n
A P
n
(1
i
)
Slide Sets to
(5)
2-6
(A/P,i%,n) factor
Excel: =PMT(i%,n,P)
2005 by McGraw-Hill,
Slide Sets to
2-7
2005 by McGraw-Hill,
Notation - continued
Example: (F/P,6%,20) is read as:
To find F, given P when the interest rate is 6% and
2-8
2005 by McGraw-Hill,
....
0
n-2
n-1
i
)
Slide Sets to
i
A F
n
(1
i
)
2-9
2005 by McGraw-Hill,
n
(1 i ) 1
(A/F,i%,n) factor
Excel: =PMT(i%,n,,F)
Slide Sets to
2-10
(F/A,i%,n) factor
Excel: =FV(i%,n,A)
2005 by McGraw-Hill,
Slide Sets to
2-11
2005 by McGraw-Hill,
A1+(n-
2)G
Base amount
= A1
0
n-1
1
n
Slide Sets to
A1+G
CFn = A1 (n-1)G
2-12
2005 by McGraw-Hill,
Gradient Example
$20
0
$10
0
0
6
$30
0
1
7
$40
0
$50
0
$70
0
$60
0
Slide Sets to
2-13
2005 by McGraw-Hill,
Gradient Components
Find P of gradient series
1G
(n-3)G
(n-2)G
(n-1)G
n-1
2G
0G
Base amount = A / period
..
0
n-2
For present worth of the base amount, use the P/A factor (already known)
For present worth of the gradient series, use the P/G factor (to be derived)
Slide Sets to
2-14
2005 by McGraw-Hill,
Gradient Decomposition
As we know, arithmetic gradients are
comprised of two components
1. Gradient component
2. Base amount
2-15
2005 by McGraw-Hill,
P G ( P / F , i, 2) 2G ( P / F , i,3) 3G ( P / F , i, 4) ...
(1)
+[(n-2)G](P/F,i,n-1)+[(n-1)G](P/F,i,n)
Multiply (1) by (1+i)1 to create a second equation
Subtract (1) from the second equation and simplify
Yields
G (1 i ) n 1
n
P=
i i (1 i ) n
(1 i ) n
Slide Sets to
(1 i ) n in 1
(P/G,i,n) factor
2
n
i (1 i )
2-16
2005 by McGraw-Hill,
(n-1)G
(n-
2)G
...
2G
Equivalent A of
gradient series
0
n-1
1
n
CFn = (n-1)G
Slide Sets to
2-17
2005 by McGraw-Hill,
Slide Sets to
2-18
2005 by McGraw-Hill,
A1(1+g)n-1
A1
A1(1+g)
A1(1+g)2
....
0
n-2
n-1
2-19
2005 by McGraw-Hill,
...
(1 i )1
(1 i ) 2
(1 i)3
(1 i ) n
Start with:
(1)
1
(1 g )1 (1 g ) 2
(1 g ) n 1
Pg A1
...
2
3
(1
i
)
(1
i
)
(1
i
)
(1 i) n
(2)
(1+g)
(1+g)
1
(1 g )1
(1 g ) 2
(1 g ) n 1
A1
...
(1+i)
(1+i) (1 i )
(1 i ) 2
(1 i ) 3
(1 i) n
(3)
n 1
1 i
1+i
(1 i )
Pg
1 g
1
1 i
ig
Slide Sets to
2-20
Pg A1
gi
2005 by McGraw-Hill,
1 g
1
1 i
ig
Pg A1
nA1
Pg
(1 i )
gi
Case: g = i
Case: g = i
Slide Sets to
2-21
2005 by McGraw-Hill,
Slide Sets to
2-22
2005 by McGraw-Hill,
Slide Sets to
2-23
2005 by McGraw-Hill,
Slide Sets to
2-24
2005 by McGraw-Hill,
2-25
2005 by McGraw-Hill,
Sensitivity Analysis
See Example 2.15
Illustratesa what-if situation for receiving money in
Slide Sets to
2-26
2005 by McGraw-Hill,
Summary
Interest factors exist to aid in determining
economic equivalence of various cash flow
patterns
Notation is introduced that is applied
throughout the remainder of the text
Introduction of important Excel spreadsheet
financial functions to aid in evaluation of
engineering economy problems
Slide Sets to
2-27
2005 by McGraw-Hill,
Slide Sets to
2-28
2005 by McGraw-Hill,