IE 3201 Chapter : Fund Eng Econ Ch4
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100( f / p, f ,2) = 113. 40 f = 6. 4894% Comments: if you use the rule of 72, you may find. 10. 29 years which is very close to the actual value. Comments: since the annuity payments are made in actual dollars, we use the market interest rate to find its equivalent lump sum amount in today"s dollars. 8%, maintenance costs are given in constant dollars, i. 20th payment in actual dollars: per month, f = A = ,000( a / p,1%,48) = . 6. 7% (a) constant-dollar analysis: we need to find the inflation-free interest rate. i i. Then, find the equivalent present worth of this geometric series at " . i. Net cash flow in constant $ factor in actual $ Comments: as an alternative way of finding the equivalent cash flows in actual dollars, we may use the compound growth rate (geometric growth and inflation): g = (1+ 0. 08)(1+ 0. 07) 1.
