Denis Lavigne 11/6/2013

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Hi,

Page 50 of the exercices uses the function AnnualizedCost. It seems to me that this function discounts "enf of the year" payments (for example for bulbs with Life = 3) to the beginning of the first (of the three) year. I am fine with this which is written as AnnualizedCost(6*5, 3) which returns the value 11.02.

But what about AnnualizedCost(1*5, 1)? Is it also a payment at the end of the first year for which the function should return the value 5.25 instead of 5 as seen in the model?

Where am I wrong?

All of these with alpha = 5%.

Thanks for any help on this "easy" problem.

Denis

Taylor Binnington 12/3/2013
 

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Hi Denis,

Apologies for the very, very late reply here. You are quite correct that there is an inconsistency in LEAP's calculation here. LEAP should calculate annualized costs by assuming that interest is paid at the end of each year, which means that we would expect AnnualizedCost(5,1) to return the value of 5.25, not 5.

We're sorry if this causes you a headache - we'll work to address the problem for the next version of LEAP. We really appreciate the feedback!

Taylor

Taylor Binnington 6/23/2014
 

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UPDATE:

Hi Denis, and others who are waiting for a fix to this problem. This has been addressed in the latest version of LEAP (2014.0.1.7), which you can obtain by clicking Help:Check for Updates.

Good luck,

Taylor