tailieunhanh - Lecture Engineering economics - Chapter 5: Annual amount and gradient functions

In this chapter, students will be able to understand: Calculating future values from annual amounts, calculating present values from annual amounts, calculating future and present values from gradient amounts, calculating present value of a future perpetual amounts, calculating deferred annuities. | Chapter 5 -Unit 1 Annual Amount and Gradient Functions IET 350 Engineering Economics 1 Learning Objectives - Chapter 5 Upon completion of this chapter you should understand Calculating future values from annual amounts. Calculating present values from annual amounts. Calculating future and present values from gradient amounts. Calculating present value of a future perpetual amounts. Calculating deferred annuities. 2 Learning Objectives - Unit 1 Upon completion of this unit you should understand Calculating future values from annual amounts. Calculating present values from annual amounts. Calculating future and present values from gradient amounts. Calculating present value of a future perpetual amounts. Calculating deferred annuities. 1 Introduction The prior chapter covered single-payment functions where a cash inflow occurred at one point in time and a cash outflow occurred at a second point in time. Many financial transactions have elements that occur at multiple points in time. These can include Equal annual cash flow. Linear gradient cash flow. Non-linear gradient cash flow. Mixed annual cash flow. 4 1 Introduction This chapter covers three types of multiple-payment situations Equal annual amounts A - equal dollar amounts flow into or out of an investment or project each year. Linear gradient amounts G -dollar amounts flowing into or out of an investment or project increase decrease each year by a constant amount linear . Mixed annual amounts -differing dollar amount flow into and or out of an investment or project each year. 5 1 Equal Annual Amounts Assumptions for equal annual amount analysis include Cash flow occurs at the end of each year. All cash flows are equal and occur each year. Note that most interest table such as those in appendix B of the Bowman text are based on end of year transactions. Interest table are available that use the beginning or middle of time periods. If using a time value of money function on your calculator check the manual to .