slides session 3A TVOM Pt 2 class chrt 3.ppt

# How much will he have in his investment portfolio

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compounded annually. How much will he have in his investment portfolio after 15 yrs? 20 yrs? 25 yrs? 30 yrs? (What if he earns 3%/yr?) F = \$5,000(F|A 6%,15) = \$5,000(23.27597) = \$116,379.85 F = \$5,000(F|A 6%,20) = \$5,000(36.78559) = \$183,927.95 F = \$5,000(F|A 6%,25) = \$5,000(54.86451) = \$274,322.55 F = \$5,000(F|A 6%,30) = \$5,000(79.05819) = \$395,290.95 F = \$5,000(F|A 3%,15) = \$5,000(18.59891) = \$92,994.55 F = \$5,000(F|A 3%,20) = \$5,000(26.87037) = \$134,351.85 F = \$5,000(F|A 3%,25) = \$5,000(36.45926) = \$182,296.30 F = \$5,000(F|A 3%,30) = \$5,000(47.57542) = \$237,877.10

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Principles of Engineering Economic Analysis , 5th edition Example 2. 24 Andrew Brewer invests \$5,000/yr and earns 6% compounded annually. How much will he have in his investment portfolio after 15 yrs? 20 yrs? 25 yrs? 30 yrs? (What if he earns 3%/yr?) F = \$5,000(F|A 6%,15) = \$5,000(23.27597) = \$116,379.85 F = \$5,000(F|A 6%,20) = \$5,000(36.78559) = \$183,927.95 F = \$5,000(F|A 6%,25) = \$5,000(54.86451) = \$274,322.55 F = \$5,000(F|A 6%,30) = \$5,000(79.05819) = \$395,290.95 F = \$5,000(F|A 3%,15) = \$5,000(18.59891) = \$92,994.55 F = \$5,000(F|A 3%,20) = \$5,000(26.87037) = \$134,351.85 F = \$5,000(F|A 3%,25) = \$5,000(36.45926) = \$182,296.30 F = \$5,000(F|A 3%,30) = \$5,000(47.57542) = \$237,877.10 Twice the time at half the rate is best! (1 + i ) n
Principles of Engineering Economic Analysis , 5th edition Example 2. 24 Andrew Brewer invests \$5,000/yr and earns 6% compounded annually. How much will he have in his investment portfolio after 15 yrs? 20 yrs? 25 yrs? 30 yrs? (What if he earns 3%/yr?) F =FV(6%,15,-5000) = \$116,379.85 F =FV(6%,20,-5000) = \$183,927.96 F =FV(6%,25,-5000) = \$274,322.56 F =FV(6%,30,-5000) = \$395,290.93 F =FV(3%,15,-5000) = \$92,994.57 F =FV(3%,20,-5000) = \$134,351.87 F =FV(3%,25,-5000) = \$182,296.32 F =FV(3%,30,-5000) = \$237,877.08

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Principles of Engineering Economic Analysis , 5th edition Example 2. 24 Andrew Brewer invests \$5,000/yr and earns 6% compounded annually. How much will he have in his investment portfolio after 15 yrs? 20 yrs? 25 yrs? 30 yrs? (What if he earns 3%/yr?) F =FV(6%,15,-5000) = \$116,379.85 F =FV(6%,20,-5000) = \$183,927.96 F =FV(6%,25,-5000) = \$274,322.56 F =FV(6%,30,-5000) = \$395,290.93 F =FV(3%,15,-5000) = \$92,994.57 F =FV(3%,20,-5000) = \$134,351.87 F =FV(3%,25,-5000) = \$182,296.32 F =FV(3%,30,-5000) = \$237,877.08 Twice the time at half the rate is best! (1 + i ) n
Principles of Engineering Economic Analysis , 5th edition Example 2.25 If Coby Durham earns 7% on his investments, how much must he invest annually in order to accumulate \$1,500,000 in 25 years? A = \$1,500,000(A|F 7%,25) A = \$1,500,000(0.01581) A = \$23,715 A =PMT(7%,25,,-1500000) A = \$23,715.78

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Principles of Engineering Economic Analysis , 5th edition Example 2.25 If Coby Durham earns 7% on his investments, how much must he invest annually in order to accumulate \$1,500,000 in 25 years? A = \$1,500,000(A|F 7%,25) A = \$1,500,000(0.01581) A = \$23,715 A =PMT(7%,25,,-1500000) A = \$23,715.78
Principles of Engineering Economic Analysis , 5th edition Example 2.25 If Coby Durham earns 7% on his investments, how much must he invest annually in order to accumulate \$1,500,000 in 25 years? A = \$1,500,000(A|F 7%,25) A = \$1,500,000(0.01581) A = \$23,715 A =PMT(7%,25,,-1500000) A = \$23,715.78

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Principles of Engineering Economic Analysis , 5th edition Example 2.26 If Crystal Wilson earns 10% on her investments, how much must she invest annually in order to accumulate \$1,000,000 in 40 years? A = \$1,000,000(A|F 10%,40) A = \$1,000,000(0.0022594) A = \$2259.40 A =PMT(10%,40,,-1000000) A = \$2259.41
Principles of Engineering Economic Analysis , 5th edition Example 2.26 If Crystal Wilson earns 10% on her investments, how much must she invest annually in order to accumulate \$1,000,000 in 40 years? A = \$1,000,000(A|F 10%,40) A = \$1,000,000(0.0022594) A = \$2,259.40 A =PMT(10%,40,,-1000000) A = \$2259.41

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Principles of Engineering Economic Analysis , 5th edition Example 2.26 If Crystal Wilson earns 10% on her investments, how much must she invest annually in order to accumulate \$1,000,000 in 40 years? A = \$1,000,000(A|F 10%,40) A = \$1,000,000(0.0022594) A = \$2,259.40 A =PMT(10%,40,,-1000000) A = \$2,259.41
Principles of Engineering Economic Analysis , 5th edition Example 2.27 \$500,000 is spent for a SMP machine in order to reduce annual expenses by \$92,500/yr. At the end of a 10-year planning horizon, the SMP machine is worth \$50,000. Based on a 10% TVOM, a)what single sum at t = 0 is equivalent to the SMP investment?

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• Fall '17
• Mike Heny

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