Page 15 - Pipeline Rules of Thumb Handbook

2 Pipeline Rules of Thumb Handbook

Basic Formulas

1. Rate of Return Formulas: È i ˘
The factor Í n ˙
( Î 1+ i) - 1˚
n
S = (1 i)
P +
is referred to as the uniform series, which amounts to
a. Single payment compound amount, SPCA. The $1.00.
n
(1 + i) factor is referred to as the compound amount of
$1.00. e. Capital recovery, CR:
b. Single payment present worth, SPPW. È i ˘ È i + i) n ˘
(1
=
RS Í n ˙ = P Í n ˙
( Î 1 + i) - ˚ 1 ( Î 1 + i) - ˚ 1
È 1 ˘
=
PS Í n ˙ È ( i) n ˘
( Î 1 + i) ˚ The factor Í i 1+ ˙
n
1
( Î 1+ i) - ˚
È 1 ˘
The factor Í n ˙ is referred to as the present worth of
i
( Î 1+ ) ˚ is referred to as the uniform series that $1.00 will purchase.
$1.00.
f. Uniform series present worth, USPW:
c. Uniform series compound amount, USCA:
n
( È 1 + i) - ˘ 1
R
n P = Í n ˙
( È 1 + i) - ˘ 1 Î i + i) ˚
(1
R
S = Í ˙
Î i ˚ ( È 1+ ) - ˘
n
1
i
The factor Í ˙ is referred to as the present worth
n
( È 1+ ) - ˘ ( i 1+ ) i n
i
1
The factor Í ˙ Î ˚
Î i ˚ of $1.00 per period.
where
is referred to as the compound amount of $1.00 per period.
P = a present sum of money
d. Sinking fund deposit, SFD:
S = a sum of money at a specified future date
R = a uniform series of equal end-of-period payments
È i ˘
=
RS Í n ˙ n = designates the number of interest periods
( Î 1 + i) - ˚ 1 i = the interest rate earned at the end of each period