Chapter 3: Combining Factors

Session 7+8
Dr Abdelaziz Berrado

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Topics to Be Covered in Today’s Lecture

Section 3: Combining Factors

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 Combining Factors
• In Chapter 2 we saw F/P, P/F, P/A, A/P, F/A and
A/F and arithmetic and geometric gradient
problems
• The formulas for the uniform series problems
were based on certain assumptions
– P is located one interest period before the start
of the first A in the uniform series
– F is located at the end of uniform series A
– The number of periods n in the P/A and F/A is
equal to the number of uniform-series values.
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 Combining Factors
• For Arithmetic Gradient series, the present worth
point is always one time period to the left of the
first cash flow in the series or, two periods to the
left of the first gradient cash flow!
• For Geometric Gradient series, the present worth
point in time is one period to the left of the first
cash flow – A1!
• However, in real life situations this is not the case
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 Calculations for shifted uniform
series
• Problems 3.1, 3.7, 3.19 pg 115, 116, 117

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 Calculation involving Uniform-series
and randomly placed single amounts
• Pb 3.21 page 117

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 Shifted arithmetic gradients
• Pb 3.37, 3.38 page 119

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 Shifted geometric gradients and
shifted decreasing gradients
• Pb 3.44, 3.45 page 120
• Pb 3.49

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 Assignments and Announcements

Homework 2 due on Thursday February 19th :
Problems 2.17, 2.18, 2.23, 2.24, 2.31, 2.32, 2.33,
2.39, 2.42, 2.44, 2.50, 2.58

Assignments due at the beginning of next class:

Read chapter 4

Answer the three online quizzes on chapter 3 on the
text’s website.

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