Scribd
Upload
354 views2 pages

Engineering Economics Formulas

1. The document summarizes key concepts related to interest rates, annuities, and bonds. It covers topics such as simple and compound interest, ordinary and deferred annuities, perpetuities, annuity due, and continuously compounded interest. 2. Formulas are provided for calculating future and present values under different interest rate conditions. Key variables include principal amount, interest rate, number of periods, payment amounts, and timing of payments. 3. Additional topics covered include arithmetic and geometric gradients for calculating present values over time, as well as the valuation of bonds factoring in interest payments, principal, and time to maturity.

Uploaded by

Borja, Alexandra C.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
354 views2 pages

Engineering Economics Formulas

1. The document summarizes key concepts related to interest rates, annuities, and bonds. It covers topics such as simple and compound interest, ordinary and deferred annuities, perpetuities, annuity due, and continuously compounded interest. 2. Formulas are provided for calculating future and present values under different interest rate conditions. Key variables include principal amount, interest rate, number of periods, payment amounts, and timing of payments. 3. Additional topics covered include arithmetic and geometric gradients for calculating present values over time, as well as the valuation of bonds factoring in interest payments, principal, and time to maturity.

Uploaded by

Borja, Alexandra C.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Module 1 Module 2

1. Simple Interest 1. Ordinary Annuity


I =Pin
{ }
−n
1−( 1+i )
F=P(1+¿) P= A
i
Where:
I = interest
P = present worth or principal amount
i = rate of interest
F= A { ( 1+i )n−1
i }
n = no. of interest periods, in years 2. Deferred Annuity

{ }
F = future worth or accumulated amount −n
1−( 1+i )
2. Compound Interest P= A ( 1+i )−m
a. j=Nominal rate of interest i
j Where:
i= m=deferred periods
n1
n=ordinary annuity periods
n1 =1(annually) 3. Perpetuity
n1 =2(semi−annually) A
n1 =4 (quarterly ) P=
i
n1 =6(bi−monthly ) 4. Annuity Due
n1 =12(monthly)
{ }
−(n−1)
1−( 1+i )
n1 =365(daily ) P= A +1
i

{ }
b. i e =Nominal rate of interest ( 1+i )(n+1 )−1
n
i e =( 1+i ) −1
1 F= A −1
i

( ) j n 1

i e = 1+ −1 5. Annuity with Continuously Compounded


n1 Interest

{ }
jn
3. P and F Relation with Compound Interest e −1
n F= A
F=P ( 1+i ) e j−1

{ }
−n
P=F ( 1+i ) 1−e
− jn

Where: P= A j
n e −1
P ( 1+ i ) = Single Payment Compound Amount
Topic 2—Arithmetic Gradient
Factor or Future Value Factor (FVF)
−n P=P A + PG
F ( 1+i ) = Single Payment Present Value Factor
{ }
−n
(PVF) 1−( 1+i )
Where: P A =A
4. P and F Relation with Continuously i

{ }
Compounded Interest G 1−( 1+i )
−n

F=Pe
jn PG = −n ( 1+i )−n F=F A + FG where
j
i i
i e =e −1
j—decimal; n—years
5. Discount
: F A= A
i{
(1+i )n−1
}
D=F−P
{ }
n
G ( 1+i ) −1
F—future worth; P—present worth F G= −n
i i
Rate of Discount, d = the discount on one unit
in one unit of time G=common difference
−1 Topic 3—Geometric Gradient
P=1+ ( 1+i )
d=1−( 1+1 ) ∨d =
D
F
−1 P=
A 1−wn
1+i 1−w { }
d D Where:
i= ∨i= 1+ r
1−d P w= use up ¿ the 4 th decimal place
1+i
If i = r
An
P=
1+i
Topic 4—Bond Value
Set-up EV at zero

P=I { 1−(1+ i)−n


i }
+C ( 1+ i )
−n

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy