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Equivalence Calculations with Continuous Payments
Lecture No.12 Chapter 4 Contemporary Engineering Economics Copyright © 2016
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Single-Payment Transactions with Continuous Compounding: Future Worth
N P
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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? F =? 1 3 2 $1,000
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Solution
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Single-Payment Transactions with Continuous Compounding: Present Worth
F N P
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Continuous-Funds Flow
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Summary of Interest Factors for Typical Continuous Cash Flows with Continuous Compounding
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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.
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Solution
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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.
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Solution Find G:
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Solution Find P:
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