
The following cash flow diagram shows lease payments at the
beginning of each period.
PV
A
Capitalized
value of
lease
y 1 y 2 y 3 y 4 ^ i
PMT PMT PMT PMT PMT
FV
The following cash flow' diagram shows deposits into an account at the
end of each period. 18
FV
A
1 ^ 2 ^ 3 4 5 y
PMT PMT PMT PMT PMT
y
As the foregoing cash-flow diagrams imply, there are five TVM
variables:
H The total number of compounding periods or
payments.
YFi The nominal annual interest rate (or investment
rate). This rate is divided by the number of
payments per jmar (.P.c't'F;) to compute the nominal
Solving Equations 18-15
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