Lec%2012_Full(1)

Lec%2012_Full(1) - IE 343 Engineering Economics Lecture 12:...

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IE 343 Engineering Economics Lecture 12: Chapter 4 – The Time Value of Money Instructor: Tian Ni Sep. 19, 2011 IE 343 Fall 2011 1
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• Quiz 3 will be given at the beginning of the class 4:30PM – 4:45PM on Wednesday Sep.21 • Quiz 3 will have 3 problems totally 10 points • You will have 15 minutes to finish quiz 3 • Please bring a CALCULATOR to the quiz • All quiz 3 problems will be selected from the following three sources. You will see the same problems but maybe with numbers changed IE 343 Fall 2011 Tips for Quiz 3 2
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• Three sources: 1. Homework 3 Problem 1-7 (solutions for Homework 3 has be posted on Blackboard Vista) 2. Examples on Lecture Notes (please refer to the full version lecture notes for the example solutions) Lec 7_Full: Example 3.5 – 3.7 Lec 8_Full: Example 4.1 – 4.2 3. Examples on Textbook Chapter 3: Example 3.7 to 3-8 IE 343 Fall 2011 Tips for Quiz 3 3
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Find F Given P: F = P(F/P, i%, N) Find P Given F: P = F(P/F, i% , N) Find F Given A: F = A(F/A, i% , N) Find A Given F: A = F(A/F, i% , N) Find P Given A: P = A(P/A, i% , N) Find A Given P: A = P(A/P, i% , N) Find F Given G: F = G(F/G, i% , N) Find P Given G: P = G(P/G, i% , N) Find A Given G: A = G(A/G, i% , N) IE 343 Fall 2011 Last Time … Interest Formulas 4 4
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IE 343 Fall 2011 Deferred Annuities Table 1: Ordinary annuities Table 2: Deferred annuities Notice that if J = 0, Deferred annuities goes back to Ordinary annuities 5
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IE 343 Fall 2011 Deferred Annuities Graph 1: Ordinary annuities Graph 2: Deferred annuities 0 N A A A . . . . . . . . . . . . . . . . . . . . . . . . . . . A 0 J+1 N A …….…… A ……. .……. . J A 6
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IE 343 Fall 2011 Deferred Annuities Present Equivalent Value ( P 0 ): Future Equivalent Value ( F N ): ) %, , / )( %, , / ( 0 J i F P J N i A P A P = ) %, , / ( J N i A F A F N = 7
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IE 343 Fall 2011 Linear (Arithmetic) Gradient Series Definition: A linear (Arithmetic) gradient series is a series of cash flows that increases or decreases by a constant amount (G) at fixed intervals from one period to the next. 0 1 G 2G 3G (N-1)G (N-2)G (N-3)G 2 3 4 N-2 N-1 N 8
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IE 343 Fall 2011 Linear (Arithmetic) Gradient Series Find F Given G: Find P Given G: 9 i GN N i A F i G F i GN i i i G F N = + = ) %, , / ( 1 ) 1 ( + + + = N N N i N i i i i G P ) 1 ( ) 1 ( 1 ) 1 ( 1
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IE 343 Fall 2011 Linear (Arithmetic) Gradient Series Find A Given G: 10 + = 1 ) 1 ( 1 N i N i G A
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This note was uploaded on 01/28/2012 for the course IE 343 taught by Professor Vincent,g during the Winter '08 term at Purdue University.

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Lec%2012_Full(1) - IE 343 Engineering Economics Lecture 12:...

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