Equal-Payment-Series Present-Worth (P/A)
Equal-payment-series present-worth (P given A) is the inverse of equal-payment-series capital-recovery (A given P). In other words, how much money today would be equivalent to a future series of equal payments made over n periods at some interest rate? The generic cash-flow diagram for this situation is shown in Figure 5.9.
Figure 5.9. The generic cash-flow diagram for equal-payment-series present-worth (lender's view)
Irving Industries can afford ten annual payments of up to $100k each. They know they can borrow money from a lender who will take annual payments. If the lender is asking for 11% interest, ...
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