Welcome to Top Notch University with Engineering Economy I.
Time Value of Money - The value of a given amount of money depends on both the amount of money and the point in time when the money is received.
Inflation - Over time the purchasing power of money decreases.
Opportunity Cost - the loss potential gain from other alternatives when one alternative is selected.
P = Present Worth | |
F_{n} = Future Worth | |
i = Interest | |
n = Number of Years |
F_{n} = Future Worth | |
P = Present Worth | |
n = Number of Years | |
i = Interest |
Annuity - a fixed sum of money paid to someone each year, typically for the rest of their life.
- Annuity happens when a uniform series of money values are incured in a our calculation horizon.
- Since these types of cash flows are common, there are special calculations designed for them.
A_{n}: A constant series of A for n years.
F = Future Worth | |
A = Annuity | |
n = Number of Years | |
i = Interest |
A_{n} = Annuity | |
F_{n} = Future Worth | |
n = Number of Years | |
i = Interest |
- Use MARR to find the value of the project in:
- Present Worth
- Future Worth
- Annual Worth
Practice Problems in book
Single Payment | Uniform Payment Series | Arithmatic Gradient | |||||||
---|---|---|---|---|---|---|---|---|---|
Cmpnd Amount Factor Find F Given P (F|P) | Present Worth Factor Find P Given F (P|F) | Sinking Fund Factor Find A Given F (A|F) | Cptl Recovery Factor Find A Given P (A|P) | Cmpnd Amount Factor Find F Given A (F|A) | Present Worth Factor Find P Given A (P|A) | Gradient Uniform Series Find A Given G (A|G) | Gradient Present Worth Find P Given G (P|G) | ||
1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
Equation | Amount | Number of Years | Interest Rate | Total |
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