Interest Factors

Interest factors are multiplicative numbers calculated from interest formulas for given interest rates and peri-ods. They are used to convert cash flows occurring at dif-ferent times to a common time. The functional formats used to represent these factors are taken from ANSI Z94, and they are summarized in Appendix B to this chapter.

Compound Amount Factor

In the formula for finding the future value of a sum of money with compound interest, the mathematical expres-sion (1 + i )^N is referred to as the compound amount factor, represented by the functional format (F/P, i, N). Thus,

F = P(F/P, i, N)

Interest tables: Values of the compound amount, pre-sent worth, and other factors that will be discussed shortly, are tabulated for a variety of interest rates and number of periods in most texts on engineering economy. Example tables are presented in Appendix C to this chap-ter. Although calculators and computers have greatly re-duced the need for such tables, they are often still useful for interpolations.