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Chapter 9 - E-Courses

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Compound Interest-4<br />

To carry out calculations, it is convenient to draw what is called<br />

as cash flow diagram.<br />

The following figure gives one such cash flow diagram:<br />

The cash flow diagram helps in analyzing the problem better.<br />

Equations (2) and (5) are used in problems concerning single payment.<br />

In today’s world we deal with problems that involve annual/monthly<br />

equal payments such as home mortgage payments, vehicle loans or<br />

loans for consumer electronic goods.

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