Page 266 - Analysis, Synthesis and Design of Chemical Processes, Third Edition
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and 3, respectively. At the end of year 5, I make a payment of $2000, and at the end of year 7, I pay off the
loan in full. The CFD for this exchange from my point of view (producer) is given in Figure E9.10(a).
Figure E9.10a CFD for Example 9.10 from My Perspective
Note: Figure E9.10(a) is the shorthand version of the one presented in Figure 9.2 used to introduce the
CFD.
Draw a discrete cash flow diagram for the investor.
The bank represents the investor. From the investor’s point of view, the initial three transactions are
negative and the last two are positive.
Figure E9.10(b) represents the CFD for the bank. It is the mirror image of the one given in the problem
statement.
Figure E9.10b CFD for Example 9.10 from the Bank’s Perspective
The value of X in Example 9.10 depends on the interest rate. Its value is a direct result of the time value
of money. The effect of interest rate and the calculation of the value of X (in Example 9.13) are
determined in the next section.
Example 9.11
