HW4_Equivalence Calculations_P,F,A,N_EngEconomics
Equivalence calculations using the four factors - present worth (P), future worth (F), annual worth (A), and nominal rate (N) - are commonly used to compare and evaluate alternative investment options. Present worth (P) is the value today of a series of future cash flows, calculated by discounting them using a given interest rate. Future worth (F) is the value at a future time of a series of present cash flows, calculated by compounding them using a given interest rate. Annual worth (A) is the equivalent annual cash flow that would provide the same value as a series of unequal annual cash flows. Nominal rate (N) is the interest rate used in the calculation of P, F, and A.
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- March 16, 2023
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equivalence calculationsp
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f
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a
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