Linear Form Graph Paper
A) Rectilinear B) Semi-log C) Log-log
A
Linear Model
Y = mX + B
Power Model (Regular)
Y = bX^m
Power Model (Transformed)
log Y = log B + m(logX)
Power Model Graph Paper
A) Rectilinear B) Semi-log C) Log-log
C
Exponential Model (Regular)
Y = be^mX
Exponential Model (Transformed)
ln Y = ln B + mX
Exponential Model Graph Paper
A) Rectilinear B) Semi-log C) Log-log
B
Subjective approach, Quick-and-dirty approximation
Selected Points
Objective approach (statistical), Linear regression
Least Squares
Simple Interest
Interest paid only on the original principal
Compound Interest
Interest paid on principal and accumulated interest
Simple Interest Equation
F = P(1 + ni)
Compound Interest Equation
F = P(1 + i)^n
Sinking Fund Annuity
F = A[(1+i)^n - 1 / i]
Installment Loan Annuity
P = [(1+i)^n - 1 / i(1+i)^n]
One arrow in, one arrow out
Compound interest
We know the final, and we make small payments towards that final
Sinking Fund
We know the initial, and get small payments out of it
Installment Loan
Present Worth
Same P, Installment OM, Compound S
Annual Cost
Installment P, Same OM, Sinking S
Future Cost
Compound P, Sinking OM, Same F
If two projects have different design lives, they must be compared using...
Annual Accounting Period
Sinking Fund Definition
Annuity designed to produce an amount of money at some future time (F)
Installment Loan Definition
Annuity used to retire a debt by making periodic payments instead of a single large payment at the end of the given time period
Accounting Period
Time interval over which interest is paid