Interest Factor Formulas Compound Amount: To find F, given P (F/P, i, n)

F " P(1 ! i ) n

Present Worth: To find P, given F (P/F, i, n)

P " F (1 ! i ) # n

Series Compound Amount: To find F, given A (F/A, i, n)

) (1 ! i ) n # 1& F " A' $ i ( % ) & i A " F' $ n ( (1 ! i ) # 1% ) i (1 ! i ) n & A " P' $ n ( (1 ! i ) # 1% ) (1 ! i ) n # 1& P " A' n $ ( i (1 ! i ) % ) (1 ! i ) n # in # 1& A " G' $ n ( i (1 ! i ) # i % )1 & n or A " G ' # $ n ( i (1 ! i ) # 1% ) (1 ! i ) n # in # 1& P " G' 2 $ n ( i (1 ! i ) %

Sinking Fund: To find A, given F (A/F, i, n)

Capital Recovery: To find A, given P (A/P, i, n)

Series Present Worth: To find P, given A (P/A, i, n)

Arithmetic Gradient Uniform Series: To find A, given G (A/G, i, n)

Arithmetic Gradient Present Worth: To find P, given G (P/G, i, n)

vi

Geometric Gradient: To find P, given A1, g (P/G, g, i, n)

P " A1 n(1 ! i ) #1
when i = g

)1 # (1 ! g ) n (1 ! i ) # n & P " A1 ' $ i#g ( %

when i / g Continuous Compounding at Nominal Rate r Single Payment:

F " P e rn

* +

P " F e # rn

* +

Uniform Series:

) er # 1 & A " F ' rn $ ( e # 1% ) e rn # 1& F " A' r $ ( e #1%

) e rn (e r # 1) & A " P ' rn $ ( e #1 % ) e rn # 1 & P " A' rn r $ ( e (e # 1) %

Compound Interest i = Interest rate per interest period*. n = Number of interest periods. P = A present sum of money. F = A future sum of money. A = An end-of-period cash receipt or disbursement in a uniform series continuing for n periods. G = Uniform period-by-period increase or decrease in cash receipts or disbursements. g = Uniform rate of cash flow increase or decrease from period to period; the geometric gradient. r = Nominal interest rate per interest period*. m = Number of compounding subperiods per periods*. _________________ *Normally the interest period is one year, but it could be something else.

vii

Effective Interest Rates For non-continuous compounding: ieff or ia = /1 !

1 0

r. , #1 m-

where

r = nominal interest rate per year m = number of compounding periods in a year

OR ieff or ia = 21 ! i 3 # 1
m

where i = effective interest rate per period m = number of compounding periods in a year For continuous compounding: where ieff or ia = e

2 3# 1
r

r = nominal interest rate per year

Values of Interest Factors When n Equals Infinity Single Payment: (F/P, i, 4) = 4 (P/F, i, 4) = 0 Uniform Payment Series: (A/F, i, 4) = 0 (A/P, i, 4) = i (F/A, i, 4) = 4 (P/A, i, 4) = 1/i Arithmetic Gradient Series: (A/G, i, 4) = 1/i (P/G, i, 4) = 1/i2

viii