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Engineering Economy Formulas

The document discusses interest rates and compounding factors over time. It provides a table summarizing discrete compounding interest factors including present worth factors, compound amount factors, uniform series factors, gradient series factors, and geometric series factors. The document also discusses converting between nominal and effective interest rates.

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Karim Hakim
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34 views

Engineering Economy Formulas

The document discusses interest rates and compounding factors over time. It provides a table summarizing discrete compounding interest factors including present worth factors, compound amount factors, uniform series factors, gradient series factors, and geometric series factors. The document also discusses converting between nominal and effective interest rates.

Uploaded by

Karim Hakim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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P

¿ move one time unit forward → P' =P ( 1+i ) ¿ move one time unit backward → P' =
1+i
Simple Interest → I =P ×i Fn =P+ I n I n=P× i× n F n=P ( 1+¿ )

TABLE 2.6
Summary of Discrete Compounding Interest Factors.
To Find Given Factor Symbol Name
P F ( 1+i ) −n
( P∨F i% ,n) Single sum, present worth factor
n
F P ( 1+i ) ( F∨P i% ,n) Single sum, compound amount factor
n
( 1+i ) −1
P A n ( P∨ A i % , n) Uniform series, present worth factor
i (1+i )
i (1+i )n
A P n ( A∨Pi % , n) Uniform series, capital recovery factor
( 1+i ) −1
( 1+i )n −1
F A ( F∨ A i% , n) Uniform series, compound amount factor
i
i
A F ( A∨F i% , n) Uniform series, sinking fund factor
( 1+i )n −1
1−( 1+¿ ) ( 1+ i )−n
P G ( P∨G i % , n) Gradient series, present worth factor
i2
( 1+i )n −( 1+ ¿ )
F G ( F∨G i% ,n) Gradient series, future worth factor
i2
( 1+i )n −(1+¿)
A G ( A∨Gi % , n) Gradient to uniform series conversion factor
i[ (1+i )n−1]
1−( 1+ j )n ( 1+ i )−n
P A1,j for i≠ j ( P∨ A 1 i % , j % , n) Geometric series, present worth factor
i− j
n
P A1,j for i= j - Geometric series, present worth factor
(1+i)
( 1+i )n −( 1+ j )n
F A1,j for i≠ j ( F∨ A1 i % , j % , n) Geometric series, future worth factor
i− j
n−1
F A1,j n ( 1+i ) for i= j - Geometric series, future worth factor

Nominal annual interest rate(r ) r


Period Interest rate (i )= →i=
Number of interest periods per year (m) m
r m
( )
i eff = 1+
m
m
−1∨(1+i ) −1

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