Equal-Payment-Series Capital-Recovery (A/P)
In this situation, we are trying to figure out how much to pay, in a series of equal payments, to recover a given initial amount (A given P). More precisely, if a known amount is deposited or borrowed today at a given interest rate, how much of an equal payment over the next n periods will reduce the amount to zero immediately on the last payment?
This is the standard formula for computing payments on a loan.
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The generic cash-flow diagram for this situation is shown in Figure 5.8. Figure 5.8. The generic cash-flow diagram for equal-payment-series capital-recovery (lender's view)
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As an example problem, ...
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