Lecture no12 equivalence calculations with continuous payment

Equivalence Calculations with Continuous Payments Lecture No.12 Chapter 4 Contemporary Engineering Economics Copyright © 2016... Practice ProblemIf you invest $1,000 in a savings account

Equivalence Calculations with Continuous Payments

Lecture No.12

Chapter 4

Contemporary Engineering Economics

Copyright © 2016

0

N

P

Single-Payment Transactions with Continuous Compounding: Future

Worth

Practice Problem

If you invest $1,000 in a savings account that pays 6% annual interest compounded continuously, what would be the balance at the end of 3 years?

$1,000

0

F =?

Solution

Single-Payment Transactions with Continuous Compounding: Present Worth

F

0

N

P

Continuous-Funds Flow

Summary of Interest Factors for Typical Continuous Cash Flows with Continuous Compounding

Example 4.10: Continuous Flows and Continuous Compounding

 Given: A = $200 per day, r =

6% per year, M = 365

compounding periods per year,

and N = 455 days

 Find: F

Note: A 15-month period is 1.25 years

Solution

Example 4.11: Continuous Flows and Continuous Compounding

 Given: A = $200 per day, r =

6% per year, M = 365

compounding periods per year,

and N = 455 days

 Find: F

Note: A 15-month period is 1.25 years

Solution

Solution