iemisc (version 0.9.9)

PgivenFivary: "Present equivalent of a series of future cash flows subject to varying interest rates" (Engineering Economics)

Description

Compute P given F and i that varies

Usage

PgivenFivary(Fn, ik, k)

Value

PgivenFivary numeric vector that contains the present value(s)

Arguments

Fn

numeric vector that contains the future value(s) at the end of a period n

ik

numeric vector that contains the effective interest rate(s) per period as a percent for the kth period

k

numeric vector that contains the kth period values

Details

P is expressed as

$$P = \frac{F_n}{\prod \limits_{k=1}^n{\left(1 + i_k\right)}}$$

P

the "present equivalent"

\(F_n\)

the "future cash flows subject to varying interest rates"

\(i_k\)

the "interest rate for the kth period"

k

the "number of interest periods"

References

William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling, Engineering Economy, Fourteenth Edition, Upper Saddle River, New Jersey: Pearson/Prentice Hall, 2009, page 142, 162.

Examples

library("iemisc")
# Example for equation 4-31 from the Reference text (page 162)
PgivenFivary(Fn = 1000, ik = c(10, 12, 13, 10), k = 1)
# i1 is 10%, i2 is 12%, i3 is 14%, and i4 is 10% & k = 1 year