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Unformatted text preview: F at end of year 1 is P at beginning of Year 2 F @ end Year 2 = P (1 + i) * (1 + i) = $110 (1 + 10%) or Combining Terms: F = P (1 + i) 2 F @ end Year 2 = $100 (1 + 10%) 2 = $121.00 What is the balance in 20 years? Yr 1 Yr 2 Yr 20 F @ end of year 20 = $100(1+10%)(1+10%)(1+10%) F @ end of Year 20 = $100 (1 + 10%) 20 = $672.75 Compound Interest Contd For any number of Periods N: F = P (1 + i) N [(1 + i) N ] is known as the Compound Amount Factor Solving for P we obtain: P = F (1 + i)N [(1 + i)N ] is known as the Discount Factor or Present Worth Factor...
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This note was uploaded on 02/16/2012 for the course ENGR 265 taught by Professor Arnold during the Spring '09 term at University of Arizona Tucson.
 Spring '09
 ARNOLD

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