Engineering Economic Analysis

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70 INTERESTAND EQUIVALENCE

TABLE3-2 End-of-Year Payment Schedules and Their Graphs

Plan 1: At end of each year pay $1000 principal

plusinterest due. $6000

End-of- Year $5000

Year Payment ] $4000

0

1 $1400 ....u $3000

2 1320 s::o $2000

3 1240

4 1160

$1000

(^5) - 1080 $0 1 2 3 4 5
$6200 Time (years)
Plan 2: Pay interest due at end of each year and
principal at end of 5 years.
$6000
End-of- Year
$5000
"'c:I
Year Payment 0 $4000
(^1) $ 400 $3000
2 400
s::
o $2000
(^3400) $1000
4 400
(^5) - 5400 $0 1 2 3 4 5
$7000 Time (years)
Plan 3: Pay in five equal end-of-year payments. $6000
End-of- Year
$5000
"'c:I
Year Payment 0 $4000
(^1) $1252 $3000'
2 1252 s::$2000
(^31252) $1000
4 1252
(^5) - 1252 $0 1 2 3 (^45)
$6260 Time (years)
Plan 4: Pay principal and interest in one payment $7000
at end of 5 years. $6000
End-of- Year
$5000
Year Payment ....$4000
1 $ 0 0 $3000
(^20) $2000
(^30) $1000
4 0
(^5) - 7347 $0 h_. ...-....".,1 2 3 4 5
$7347 TIme(years)