Remember that i utilize the factor P / Good we , n as soon as we have equivalent selection of costs
Analogy 1-5:
Assess the current property value ten consistent assets out-of 2000 cash as spent after yearly getting focus rates twelve% annually compound per year.
Using Formula 1-5, we will see: P = A good * P / A i , n = A [ ( step one + i ) letter ? step one ] / [ we ( 1 + i ) letter ] P = A good * P / A great 12 % , 10 = 2000 * [ ( step one + 0.several ) ten ? step 1 ] / [ 0.12 ( 1 + 0.several ) 10 ] P = 2000 * 5.650223 = $ eleven ,
we ‘s the interest and you will letter ‘s the amount of monthly installments. There was an essential presumption here, the initial fee has to start out-of seasons 1. In this case P / A great we , letter often go back very same establish worth of new equal payments.
