Smug) | Clags~ 62 ee MMR — Vinvary preoporchionel ty te Semple Annash rs whien chy swh MIRA) arngurt g oar [team 1 Whetual Rad 186 } A yore Tole) Payable, oO ton > Woato = OTK a RAL scare » peinsipol amoun) Wy WD TK Nn tg See ple indraat payaste oftirc 274 year, Thuy» addr 2 ie 100 > 10 —> Gd ++I 1-120 | % yarw , too 10 —> (avo wotroty) +130 1K “f otal inderua} tg Ur then pe pnd Nu, PF prene pa | . N= number f inersal PdaDSDEHSHEHSEESDEBESBEHEHREHHEP SDS 0 Posyabu, F = pal period "4 = pt PHL & = inbred rete = pC4+Ni) Compound Plerent ; Th this sonaph wherond is Careged at principal amount and | adoumuliid — vniercead ol - ary garcied f Aim. . Amoun) owed Toh ea Braoun) a] Perciod al be 5 nny a ; 4" iso Wo: 1900 2 bo No 1218 12) 13a] 4 r2r0 $138 NI fore oormpsund ‘mbras) ) Pe PareNornind and Effeetive Linberand Rate. When oa prineipal amount and ‘mbren) rear is ia Arn we FT have to considers tthe olive “plerciat Elelive inran) = only orv ysare. period is less than 4 arcs dwn 58 nominal indureah reahes Daan be quardtely, ‘monthly — ore daily. ike i. ‘compounds d Semi annually. Elfeetive, ‘mbreen! tale, ty USuall qe fran Porivral : E> elfectine interesad reake. R= nominal — Inberegl teal. . ‘ . « 4 « ‘ « e « e e « 8 q © ® © © e o ¢ G3, perc perciod and ‘inberenal is Sompounded ad hol td: hore, a7, pee am > number ¢ ieee a ie 22 perciod pert te : on es DXB CF TN AN Glalrwnt fill ee, ay, cormpountsd ami annually , Nomi) intra! reals wlakrnwn) will lus Gonkims © compoun di ertisd + : a} o "onthe f convert to € and thn to Wonk AH. . a . eat aime a eae Gia) = Nominal inbreerh 3 yon A : > iy PCH —m) mM = number 4 period m Gee) 2 CHAR) > |é (4 RY 4] -fors ne yor: PROLEPRITIIITITTITIT FSP PR ORSSues OST O OSS O SSS SSSHSSESLSEEEEHEEEEHSHOEKE SES BJ. pare parciod compounded grantor [ree 4 damvnhanis } Nira, Yo2 4 pox yar , ohe7, Ahwa, > ay 127, White Pm? d ah . Me Ly 2 (49)'-4 = (at-4) Preino'pal = Iso amenity Ynlyun) robs 27. Il op. pie en) : = 1000 CA¥ 0-82X 1242) for ne 2 yur 224 month $1490 | jel Compournd Anbraad pate’ af kre 2 year Pe PCH 12X2 hw, me purviod ez tteo (44002) per ac. FoR ay Me 2 yeaa c 5 mn 4 tex = C14 ®/m) 74 2 = Cieond) 4 = 0268 _ vn Sa eho = 1060 (4+ 0-26) HOR,Tel neyminal tnleresed real © o-e2x19 = o2y TE) cttealive vnbnee) rakes 0-2¢8 Continue Trdsraed rakes Rhin compounding prided is wa Syinall thug m 36 infant, n> neti Py ' Phe TaseAl 2P de Tse") Py Pee here yes dontinnewy interent anaes By = P Ciste)” ral awn (14 Les) eeeF » Booramieg Sank positive, elags- 93 Ninh! i gee ener r “Ty fe SS 4 coo) Ti . 5 } vege anh io Cash Flow ey ram Davodnint E> exponen 34 Epa te loss Roz reece ¢ FoR ann pref Sunk vate = End vale ¢ prajeel / ccxop value FOY = end ef the Yeare, mre profil” ty aalauleteel oo BOY basis DF is diccrante, SAL . an Drhrrees) reake, hoa do be quer Joo 1 Goh fe diagrcom ‘ai 5 1 0 tend: Tr bond papery mylura Value ie in future 36 given OFC writen in bend paper + Qunterent is alee qu? Sy bond pape: © 5 arn bond page F2pCH+O Tall Te t . Fr ~ P Re 000 nyo, : - F Qn Ne 19 " afoscr Discount = tHe Aiffercence velween —-fubure value amd | pieeernt buying value 8) =49C28 Demak Drmut tug » vaca of equal pone nt as Calud annus Wis acourc a} epuab Sime tnbavel Svar amnur ber! Commonly Nbed WN angel aupecds . Th haw to be pois ah Pu end WZ IAL periods PerrrrrzyrTyrTyyDnmvily Dae 5 eae si paymen| wlards at ute yeore ore haa to bo pod ak She fat {AN parciod, Cah fm dors of tit the ei ning : “4 - — "> Eom payer dnnuily volu = -Tolal amoun! & crah involved at the end & ern periods Ph — aa ott hs Fe pad” . : Se De Now. fF = RCH + pcwoet acnd + RCO *R Re untforcrn periodic payne t: inleraad yeate “ ad fs anus vole oftere dha and ¢ one priciod « rad ST sa “det on be dokun 10 compounding ‘ { iy) ee trakit Cl See ee BesT)_o- cued Pee ROOK P= R[Us)™ qf pruwsen) worthy » pe par? = R Tard) -i\fe alowo™3] fer ae Now, Now, ope Defend bedfecrerd Oniby + ee a aie, 49 wh amma elareds offre daliperiod f Aime. a DHere defertrad peisod, 4 1? She annuity — ill oa ee 4 5 © | anleulahd a8 me | > orcdina annu’ inna aaleulaNien Dedarvrad' hod. Pagrnah clan herds al th begreningg rrtrit 1") Prrily Dae : : : ahs fy > eT we 7] Cred MA Aoferirerd enh 4s ren ts done ab er) tr Where Goferrad — percis a Fe deferred annuity vatur, Past = Prevent yale ot ane end ¢ defbtcrad period . Fe Ry C40" Aree ae Ankeremedinte valun a Pag ~ Present valut ab dv ohard of the period. P d= period of deferment, Pig = To Ported of Afra a Givens Pay = B00 8%e BOT Re nominal mbereegd reahe ~ 16% mM > emir omnuatly = 9 AS paymen) is done ah HN od ain i: vied & dafriemand 9 Payment how to ee dons in 12 Yrorn, Annuity period > 12 Yeo, ac ons timpanttvanuelvaemaneeeenanercrerererercetccesPip = Py (HO* = = PCO” : [Pave Ha cms 7 B= PCM, en 0n) IWS Means Pat, Pro to be -foura fore Ren P. at Annuity 3 te qe ten, =f (%. uy a) if Phew to be deliemined, D> PAR, ee) { Phww to be dbremimned p= AGA/pr en) Ean ae f= lowes Cash Flow Sragrean : + ™ 2006 Y rat oe [> 2 10 Ste eH e clkelive inten) ral 12000, oD ECM in Im) ¢ —z CF (Héy%-4 = 0+ 758 X 10/000 47 59Now ai ch ts Onttinuows then. tert Pnftalion si 4 ‘Ne want to et dhe da preci ated ormount aftare the verful Vite. . ft ordiginal ae qu) punt > Perepehae + Lavage value, one have to find oul SM amount 4 ‘moray that hay be 8 jyumhd at a “wiicia} armounl ul, t= 67 plo a tribal eck = (27060 Salvage valus > 2000 ~~ ~ 2 © ~ a4 a i. EB = 10 year Fe P.O)” on ou mw to Zarcr§ 10/066 % Geruvie)) Gite wage aoe vei ° { / 4 eo dssitud corer) = 120007200 Cog Jalixed Ct} - . = 10/060 *[ oriine) ees} + ho ground Dab ¢ equipmunt Won soy Sored fx perpelirtton Taplace men) ag} - (Saihel Crd i Salvage Valu teh Pb jhe prosent principal Jhad will preside” at € intoresgt peake oflere n period. thins op pct)” F =( +44) fore perpeturti on 4 (pret) =P CHD” YZ pe Cr this amount should Wo principal U+d%4dagitalizad ash K = Cyr P Nre Oye es} & tho ysipment f original ont » Capilalized ant is vad to Compare the allerenative. ophent, Example: . Porn MC: . Ce ; Cp, = 66 -6 swe | RHR Ke Gy Gora bans) > Bo00 4 Oe ue C= 0-06 (eed 06)? ee = 38Fe Now, 8S =)5000 7 Cp 2{ {5010 -0) = 15/060 Now, : =O ee GR a = \7e- 1500 9% - = (ew) (a7 ro) ayn _ 1s060 THO” = Te alla) p43 » (40-00 = 1-93 Vaud de A vaeful iife ef es ts gre Han Aig) brankeven point n, +hen We should ci fore &, PETIT TTUETUTTUAULIAETTTTTTTTTEVRATC SETAE AERA EE EOnAnan.Chapherc~ 4 (Rulivan) Evaluating oO Single ‘Pregjeet Minimum MHractive Rate f Relarn (Nap) . ig vually done top evel ra Sis the oppsr oy ‘us ef Fak hy Tro pe Considereation— wo Amount of Money avoidable fare Anwmatment , BUR and Cot ef ihe ola OY Gad yeots em Foire purepoas « OO Risk Resociahed with Anvegted oppore hunitizg ovailabls . Ww) Tyre & sgn Yvolved « de) Delerainadion, MARR CHurdle Rate a shy eed rf tne Mare 4s The amount i6 inkens dhe gure is inkreard Dt te {" my ralorn 6 whin is. shill a Pha, YW Ces} oe ore Intercents cD . a AB= Cas} a mon sawn 7 / ye Prasent worth Method + uy : St fo baged on the sooty , an of dhe fu hares Coah fw” ts a Cumutaiive ~ey bres ore beginning point 1 Himes 4 pragen} worth 1s geste tron xores tha, the Preyeed is Vabluat Gu k Comacting al the Coah tw into presen} or future > © oe Worth WW calud equiva nt wordh, . Thuss pid gre PANO HUT EOerOMaly VALU ‘ ¢ « ne Msi clue -06 Sevtreare meae |e ee Salvage, A= 1000 1K I, «| 27 Cagile\ roluren s D-$= ER = Ooo TK Ba A= "Jooo Tk Ay = Seow [ay =] ood, = PCM thn) Nw, coming & vty arnuthy 5 Ay = PCM tt Q Now! , Din ROHR @ Manas) are iy Capihe) talon ae LCa/p, " aye SCP NT, a) Arnvual iat AW- p-e-ERLIZ) we R-EW CPCI) IOTITTTIUTIGTUTAITTITTTITTTTTITTTTTTTLTETEASETEOe gus a [? ees t= 287% 25K Prosen\ wordh Marae DSN Word) Maha NW prow) worclhs Gk : oO - worl Sp8 Kon 5 234249 gy 23995 Th NOW, R= 5000 TK my ; fe PCRO Bye . ¢ Sane 2 he aan * (Ho) now, DS 5 pond a, «(terrasse Fuburea a Roba mordh Medhed = wn mR TOO A gooos (12-4) on = 595398 ; 7) H = 25000 (teod) = 6220¢ 2d paint «= (5000+99532-8— C2202) = 232498 TK Usturce - 06 » EcoremiaVOOR DVSVSODOSSSESSEHE EDO HHH EHS ESSEESSESSSSE SSS AW muthod + } a CRON = T(Hp Tw) = SCAYe im) ~W, ee R-E = $680 AK : ee\= ase0e (A/py 2% N) P cath G = ayy 7 3360 Ted) eal et Foosxe2 cyo- ce, = as] ehewaiad CR = —(KBMO~ CFL) © - FE8E co BW RR EW CRL = R00 — FORE 2 Ble LTniermal Rate q fare Puluren CRe)S Th ig the tnleren) tote pr which —equivalin niorth of ans alorenatwe eaah flowy iS auat to arco. Equivalent Neth on bo fond ot pw /Pn/aw mthod . salving equadton jor pry /0/ Avy fore ee spe fore P=) Pee ort FW=0 TEP wh ky only positive 2 tudepls extend ee Aum Sf He cong dil-{tot0- i er, ow fuss given Ahan Seo can te megaliuesPw = PH Ay( 1% w) ARE Pfs vi’, 0) F-2sk Bp BL B00, F2SK Nw . - . : . PI =O 5 pete fore UY. St isthe SPR Tea to be posite — © Belh rertaiphs and - &Xponaws are prose Sebek a cost alternative dtagrcam pS only weantive Conh few: on “Total Conn fans 5K 2K — FxK)) > 4K thoy omy TPR A renullant Coah find is nesahive , DH ig nod povsibtL fe tere Fhe DPR GF the qn Conny -{ioe wo, POPPE TIPTIPITTIPTTTTTITTILILIGILELERALERRRRRARREREE