1. Shifted Series & Random Single Amounts
These cash flows require the use of multiple factors
A=10,000
i=12%
6000
Example: The equivalent annual worth in yrs 1-7 for the
cash flow shown below at i=12% per year is:
(a) $ (b) $ (c) $10, (d) $11,780
Solution: The annual worth in yrs 1-7
can be found using either
the A/P or A/F factors
For A/P factor, find P in yr 0, then annualize with (A/P,12%,7)
For A/F factor, find F in yr 7, then annualize with (A/F,12%7)
Using A/F: A=[10,000(F/A,12%,6) + 6,000(F/P,12%,2)](A/F,12%,7)
=[10,000(8.1152) + 6,000(1.2544)]( )
=$8,789.80
Answer is (a)