Chapter 2

Factors : How
Time and Interest
Affect Money

Lecture slides to accompany

Engineering Economy
7th edition

Leland Blank
Anthony Tarquin

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 Chapter 2
Factors : How Time and Interest
Affect Money
 Single Amount Factors(F/P and P/F)

One of the most fundamental factors in

engineering economy which is the one that
determine the amount of money F
accumulated after n years from single present
P with interest compounded one time per year.

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Uniform series present worth factor

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 Introduction to Spreadsheet Functions
Excel financial functions
Present Value, P: = PV(i%,n,A,F)
Future Value, F: = FV(i%,n,A,P)
Equal, periodic value, A: = PMT(i%,n,P,F)
Number of periods, n: = NPER((i%,A,P,F)
Compound interest rate, i: = RATE(n,A,P,F)
Compound interest rate, i: = IRR(first_cell:last_cell)
Present value, any series, P: = NPV(i%,second_cell:last_cell) + first_cell

Example: Estimates are P = $5000 n = 5 years i = 5% per year

Find A in $ per year
Function and display: = PMT(5%, 5, 5000) displays A = $1154.87

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Sinking Fund Factor and Uniform Series Compound
Amount Factor (A/F and F/A)

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Sinking Fund Factor and Uniform Series Compound
Amount Factor (A/F and F/A)

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 Example : Un-tabulated N

40 0.0221
X=0.0187
42
45 0.0137
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the present worth of the gradient series only.

The equivalent uniform annual series AG for an

arithmetic gradient G is

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