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3.3.2 Single-Payment Present Worth Amount Here, the objective is to find the present worth amount (P) of a single future sum (F) which will be
3.3.2 Single-Payment Present Worth Amount Here, the objective is to find the present worth amount (P) of a single future sum (F) which will be received after n periods at an interest rate of i compounded at the end of every interest period. The corresponding cash flow diagram is shown in Fig. 3.3. F 4 n 3 i % P Fig. 3.3 Cash flow diagram of single-payment present worth amount. The formula to obtain the present worth is F P = = F(P/F, i, n) (1 + i)" where (P/F, i, n) is termed as single-payment present worth factor. 30 Engineering Economics EXAMPLE 3.2 A person wishes to have a future sum of Rs. 1,00,000 for his son's education after 10 years from now. What is the single-payment that he should deposit now so that he gets the desired amount after 10 years? The bank gives 15% interest rate compounded annually
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