TABLE 3.4 Summary of Discrete Compounding Formulas With Discrete Payments Factor Cash Flow Flow Type Notation Formula Excel Command Diagram Compound F = P(1 + i)N amount (F/P, i, N) =FV(i, N. O. P) Present worth P = F(1 + i)-N (P/F. i, N) =PV(i, N, O. F) Compound amount F = A ( 1 + i ) N - 1] =FV(i, N. A) (F/A, i, N) 0123 N-1 N Sinking A = F (1+IN - 1) -PMT(i, N. O, F) fund (A/F, i, N) Present worth P = A [(1 + i ) N - 1] Li(1 + i)N -PV(i, N, A) (P/A, i, N) AAA AA 123 N-IN Capital recovery [ i(1 + i) N (A/P, i, N) A = P (tin - 1. -PMT(i, N, P) Q Linear gradient (N-1)G Present P = G (1 +i) - iN - 17 2 ( 1 + i ) N 2G worth (P/G, i. N) A =G ( 1+ i)" - iN - 1 Y p 123 N-IN Annual worth (A/G, i, N) (1 + i)N - 1] Geometric gradient A1 1 - (1 + 8)"(1 + i)-N A(1+g)N-1 A3 Present P = i - g A2 worth (P/A1 . g. i, N) Al( ). (ifi = 8) 123 PAssume i=10% 1. Today (t=0) your daughter is born (congratulations and good luck with that!) and you decide to start saving for her education. You figure that you will need to pay for 5 years of undergraduate engineering at $20,000 per year (from t=18 through t=22), and two years for graduate school at $30,000 per year (t=23 and t=24). How much needs to be in her education account at t=18 to fund her education in full? (Choose the closest answer) a) 117,960 b) 118,960 c) 119,960 d) 120,960