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garr6120
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given a net future worth of $72700 after 5 years at 10% interest is it possible to convert it to an annual equivalent worth that is 20 years at 10% interest?
Engineering Economics: Converting a NFW to an AEW (future worth)
- Context: Undergrad
- Thread starter garr6120
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- Economics Engineering
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SUMMARY
The discussion centers on converting a net future worth of $72,700 after 5 years at a 10% interest rate into an annual equivalent worth over 20 years at the same interest rate. Participants confirm that this conversion is feasible by treating the future worth as an annuity at 10% interest for 20 years. The key calculation involves determining the annual payout that will deplete the principal by the end of the term. The discussion emphasizes the importance of understanding net present value (NPV) in this context.
PREREQUISITES- Understanding of net present value (NPV)
- Knowledge of annuity calculations
- Familiarity with compounding interest principles
- Basic financial mathematics
- Learn how to calculate annuities using financial formulas
- Study the concept of net present value (NPV) in depth
- Explore the implications of compounding interest over different time periods
- Research financial calculators or software for annuity calculations
Finance students, financial analysts, and anyone involved in investment planning or economic engineering will benefit from this discussion.