s10 ie 305 exam 1

s10 ie 305 exam 1 - IE 305 Exam 1 Chaps 3,4,5,6,7 Review...

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IE 305 Exam 1 Chaps 3,4,5,6,7 Review Topics
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Main Topics P, F, A, G and g Remember n and i must be consistent Look closely at cash flow diagrams Effective Interest (Annual or Periodic) APR is Nominal (same as APY if cash flow is annual) APY is Effective (compounding more frequent than cash flow) Study continuous compounding (not continuous payments).
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Gradients Linear (G), adds to an underlying Annunity. First cash flow is A for annuity Difference between A2-A1 is Gradient Decreasing gradients subtract from annuity Geometric (g) is a stand-alone formula Decreasing gradients just have a –g. A1 is first cash flow
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Payback & Alternatives Conventional Simple and Discounted Simple – no impact of interest Discounted – includes interest Find PV or FV of investment given MARR Make sure alternatives are at same time (i.e. use LCM) – may need to salvage early Find AE of investment given MARR No need for LCM (if need=LCM or inf.)
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