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IT-390 Engineering Economy

IT-390 Engineering Economy. Engineering Economy. ROI or return-on-investment is required for project existence “Time value of money” is applied to engineering decision making. Engineering Economy - a collection of 6 mathematical techniques which simplify economic comparisons.

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IT-390 Engineering Economy

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  1. IT-390 Engineering Economy Ch 10

  2. Engineering Economy • ROI or return-on-investment is required for project existence • “Time value of money” is applied to engineering decision making. • Engineering Economy - a collection of 6 mathematical techniques which simplify economic comparisons

  3. Engineering Economy • Symbol Definitions • P = present amount or value • F = future amount or value • A = annuity • n = number of periods • i = interest rate

  4. F = ? P = 1000 Engineering Economy • Equation 1 Find Future if Present is known SPCAF - Single Payment Compound Amount Formula

  5. F = 1000 P = ? Engineering Economy • Equation 2 Find Present if Future is known SPPWF - Single Payment Present Worth Factor

  6. A = ? P = 1000 Engineering Economy • Equation 3 Find Series if Present is known CRF - Cost Recovery Factor

  7. A = 1000 P = ? Engineering Economy • Equation 4 Find Present if Series is known USPWF - Uniform Series Present Worth Factor

  8. F = 1000 A = ? Engineering Economy • Equation 5 Find Series if Future is known SFF - Sinking Fund Factor

  9. F = ? A = 1000 Engineering Economy • Equation 6 Find Future if Series is known USCAF - Uniform Series Compound Amount Factor

  10. Engineering Economy • To solve any Engineering Economy Problem, Follow these steps: Identify each term F_________ P_________ A_________ n_________ i__________ • Only four are needed to solve the problem. One will be unknown and one will be unused • Select the proper formula and plug in the three known to find the unknown

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