TIME VALUE OF MONEY III COMPOUND INTEREST- MULTIPLE PAYMENTS A Example: $100 invested initially at 5% per annum At end of Year l, have $105.00 on deposit Pay in another $200. Begin Year 2 with $305.00 At end of Year2,dd(0.05)(305.00)=S15.2 Pay in another S300. Begin Year 3 with S620.25. At end of year3,ad(0.05)620.25)=S31.01. Pay in so. Begin year 4 with s651 26 And so on 10/15/99 Engineering economics 110/15/99 Engineering Economics 1 6 TIME VALUE OF MONEY III COMPOUND INTEREST - MULTIPLE PAYMENTS t Example: $100 invested initially at 5% per annum At end of Year 1, have $105.00 on deposit Pay in another $200. Begin Year 2 with $305.00 At end of Year 2, add (0.05)(305.00) = $15.25 Pay in another $300. Begin Year 3 with $620.25. At end of Year 3, add (0.05)(620.25) = $31.01. Pay in $0. Begin Year 4 with $651.26. And so on