Engineering Economic Analysis

88 MORE INTERESTFORMULAS

.....S...bU:JTlON1Ic.".,," ...,>~

The diagram on the left shows the situation from the man's point of view; the one on the right,

from the credit union's point of view. Either way,-thediagram of the five deposits and the desired

computation of the future sumFduplicates the situation for the uniform series compound amount

formula

F

r

A A A A A

+ + + + +

0 1--'--2 3--'--4---5

1

0-1-2-3-4-5

t t t t t

A A A A A

F ;:

[

(1 +on- 1.

]

..

F- A. · i... =A(FIA, z%,n)

whereA= $500,n. ..5,i....0.05, Funknown. Filling i.11fi1eknownvariable$gives

F. .$500(F I A,5%, 5) $500(5.526) .$2763

Th~re willbe $2763 in the account followingthefifthdeposih

If Equation 4-5 is solved forA,we have

[

i

]

A-F

• (1 +On- I

= F(AI F, i%, n) (4-6)

where

is called theuniformseries sinking fund2 factor and is written as(AI F, i, n).

2Asinking fundis a separate fund into which one makes a unifonn series of money deposits(A)with

the goal of accumulating some desired future sum(F)at a given future point in time.