From interest tables, determine the values of the followingfactors by interpolat

Question

From interest tables, determine the values of the followingfactors by interpolation, and compare your answers with thoseobtained by evaluating the F/P factor or the P/F factor: a. the single payment compound-amount factor for 38 periods at9.5% interest. b. The single payment present-worth factor for 47 periods at8% interest. I have no idea what interpolation is, there is only a vaguedescription on it in our book??? From interest tables, determine the values of the followingfactors by interpolation, and compare your answers with thoseobtained by evaluating the F/P factor or the P/F factor: a. the single payment compound-amount factor for 38 periods at9.5% interest. b. The single payment present-worth factor for 47 periods at8% interest. I have no idea what interpolation is, there is only a vaguedescription on it in our book???

Explanation / Answer

(a)    Single Payment Compound AmountFactor or F/P factor :

         F = P(1+i)n

         n = 38periods

         r =9.5%

         F = P(1+0.095)38

         F = P *31.45839

(b)   Single Payment Present – worth factor(SPPWF) or P/F factor:

         P = F[1/(1+i)n

         n = 47periods

         r =8%

         P = F[1/(1+0.08)47]

         P = F[1/(1.08)47]

         P = F *0.0268586

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