HW5_Deferred Annuities and More Complicated Equivalence Calculations_EE

A deferred annuity is an annuity that does not begin making payments until a specified date in the future. In engineering economy, deferred annuities are often used to evaluate investments in which cash inflows or outflows are expected to occur at a future date. Engineers use present worth, future worth, annual worth, and nominal rate factors to calculate the value of deferred annuities and compare them to other investment options. In more complicated equivalence calculations, engineers may use multiple factors in combination to evaluate investments with complex cash flow patterns. For example, engineers may use a combination of present worth, future worth, and annual worth factors to evaluate a project with an initial investment followed by a series of recurring cash flows and a salvage value at the end. This allows them to accurately compare the financial viability of different investment options, taking into account the timing and magnitude of all cash flows.