510 Midterm
Terms
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- Annuity factor
- [(1+i)^n - 1)]/[i*(1+i)^n]
- NPV
- Annual distribution * annuity factor
- PV
- x/(1+r)^t
- PV in perpetuity
- x/r =amount*perpetuity factor
- CRF
- [(1+i)^n * i]/ [(1+i)^n - 1] OR 1/Annuity factor
- cost effectiveness
- (CRF * input costs)/waste reduction
- Internal rate of return
- Discount rate at which the PV of a project becomes zero
- Opportunity cost
- correct discount rate to use for PV
- Annual Compounding
- P = Po*(1+r)^n P = Ending amount Po = Starting principal r = rate t = time (years)
- Continous Compounding
- A=P*e^rt A = Amount P = Principal r = rate t = time (years)
- Perpetuity Factor
- 1/r