C2: P/F/A/G Equations

Question 1

time

(in Eng Econ)

Answer 1

time: how often interest is paid

Question 2

money is represented how?

Answer 2

money is represented as…

single-payments (P and F)

• a single amount paid today P or in the future F.*
• *P** = PW = PV = cash value today
• *F** = FW = FV = future cash value

uniform series cash flows (A):

• a constant fixed amount of money that occurs at repeating time intervals*
• *A** = The value of a fixed constant amount of money during each time period.

a gradient (G and g):

• an amount of money that either increases or decreases during each time interval.
• G**= A constant arithmetic change from one time period to the next.
• *g** = A constant percent change from one time period to the next.

Question 3

P

Answer 3

P

Present Worth = Present Value

P = value of single amount today
(at time = 0)

Question 4

F

Answer 4

F

Future Worth = Future Value

F = value of single amount at some time in the future
(at time > 0)

Question 5

A

Answer 5

A

Uniform series end-of-period cash flows

The value of a fixed constant amount of money during each time period (i.e. repeating time intervals).

Question 6

G

Answer 6

G

an arithmetic gradient

an amount of money that changes (inc/decrease) by a constant arithmetic amount from one time period to the next.

Question 7

g

Answer 7

g

a percent gradient

an amount of money that changes (inc/decrease) by a constant percentage from one time period to the next.

Question 8

i

Answer 8

i

interest rate per period
(decimal value)

Question 9

Equation

F = f (P) = ?

Answer 9

Note:
The value for F may be any number of time periods away from P.

Question 10

Equation

P = f (F) = ?

Answer 10

Note:
The value for P may be any number of time periods away from F

Question 11

Equation

P = f (A) = ?

Answer 11

Note:
P must occur one period
before the first A

Question 12

Equation

A = f (P) = ?

Answer 12

Note:
P must occur one period
before the first A

This equation is the reciprocal of the equation for P = f (A)

Question 13

Equation

A = f (F) = ?

Answer 13

Note:
The value for F occurs in the same period as the last A

Question 14

Equation

F = f (A) = ?

Answer 14

Note:
The value for F occurs in the same period as the last A

Question 15

Equation

P = f (G) = ?

Answer 15

Note:
The value for P occurs two periods before the first G

n = count G values + 1

Question 16

Equation

A = f (G) = ?

Answer 16

Note:
The value for first A occurs one period before first G

n = count G values + 1

Question 17

Need Example quesitons