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Uniform Series Factors in Engineering Economics

This document discusses uniform payment series and compound amount factors. It provides examples of calculating present worth, future worth, sinking funds, and capital recovery factors for uniform series. Formulas are given for the compound amount factor and examples are worked through applying the formulas.

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Waleed Aziz
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15 views15 pages

Uniform Series Factors in Engineering Economics

This document discusses uniform payment series and compound amount factors. It provides examples of calculating present worth, future worth, sinking funds, and capital recovery factors for uniform series. Formulas are given for the compound amount factor and examples are worked through applying the formulas.

Uploaded by

Waleed Aziz
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Engineering Economics

Chapter 4
MORE INTEREST FORMULAS

1
Components of Engineering Economic
Analysis

• Calculation of P,A,and F are fundamental.


• Some problems are more complex and
require an understanding of added
components:
• Uniform series
• Arithmetic or geometric gradients
• Nominal and effective interest rates
• Continuous compounding

2
Uniform Payment Series
Compound Amount Factor F
• The future value of an investment

• A = An end-of-period cash receipt or disbursement in a uniform series, continuing for n periods, the entire series equivalent to P or F at interest rate i

F= P(1+i)n

3
Uniform Payment Series
Compound Amount Factor F

• Uniform series compound amount factor

4
Uniform Payment Series
Compound Amount Factor F
• Example 4-1

5
Uniform Payment Series
Compound Amount Factor F
• Example 4-1

6
Uniform Payment Series
Compound Amount Factor F
• Solve previous equation for A

• Uniform series sinking fund factor

7
Uniform Payment Series
Compound Amount Factor F
• A sinking fund is a separate fund into which one makes a uniform series of money
deposits (A) with the goal of accumulating some desired future sum (F) at a given future
point in time.

8
Uniform Payment Series
Compound Amount Factor F
• Example 4-2

9
Uniform Payment Series
Compound Amount Factor F
• substitute for F, we get

• Uniform series capital recovery factor

10
Uniform Payment Series
Compound Amount Factor F
• Example 4-3

11
Uniform Payment Series
Compound Amount Factor F
• Present sum P

• Uniform series present worth factor

12
Uniform Payment Series
Compound Amount Factor F
• Example 4-4

13
Uniform Payment Series
Compound Amount Factor F
• Example 4-4

14
Summary
• Donald G. Newnan, et al., “Engineering Economic
Analysis,” 9th Edition, Oxford University Press
(Read Chapter No 4)

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