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Relations for Discrete Cash Flows with End-of-Period Compounding

Factor Notation Sample Cash Flow

Type Find/Given and Formula Relation Diagram
F⧸P (F⧸P,i,n) = (1 + i)n F = P(F⧸P,i,n)
F
Compound
amount 1 2 n–1
Single 0
…
Amount P⧸F 1  ​
(P⧸F,i,n) = ​ ——— P = F(P⧸F,i,n) n
(1+i)n
Present
worth (Sec. 2.1) P

(1 + i)n −1
P⧸A (P⧸A,i,n) = —————
​   ​ P = A(P⧸A,i,n) A A … A A
i(1 + i)n
Present
worth 0
…
i(1 + i)n
A⧸P (A⧸P,i,n) = ​ —————  ​ A = P(A⧸P,i,n) 1 2 n–1 n
(1 + i)n −1
Capital
recovery (Sec. 2.2) P
Uniform
Series (1 + i)n −1
F⧸A (F⧸A,i,n) = —————
​   ​ F = A(F⧸A,i,n) F
i
Compound
amount 0 1 2 n–1 n
…
A⧸F (A⧸F,i,n) = —————
​  i  ​ A = F(A⧸F,i,n)
(1 + i)n − 1
Sinking
fund A A…A A
(Sec. 2.3)

(1 + i)n − in − 1
PG⧸G ———————
(P⧸G,i,n) =   
​   ​ PG = G(P⧸G,i,n) PG
i2(1 + i)n AG AG AG … AG AG
Present
Arithmetic worth
…
Gradient 0 1 2 3 n
AG⧸G 1 ​ − ———————
(A⧸G,i,n) = ​ — ​  n  ​ AG = G(A⧸G,i,n) …
i (1 + i)n − 1 G 2G
Uniform
(n–1) G

{
series (Gradient only) (Sec. 2.5)

Pg⧸A1 and g
[ ( )]
———————
  
​ 
1+g n
A1​ 1 − ​​  ​ ——— ​  ​ ​  ​
1+i
 ​ g≠i A1 A1(1+g)
…
A1(1+g)
n–1

Geometric Pg = i−g
Present …
Gradient
worth ​  n  ​
A1 ——— g=i 0
1 2 n–1 n
1+i
(Gradient and base A1) (Sec. 2.6) Pg

bla23437_fm_i-xviii.indd 2 19/11/16 7:26 pm