EECE 450 — Engineering Economics — Formula Sheet Cost Indexes: Index valu e at time B Index valu e at time A Cost at time B Cost at time A = Power sizing: power -sizing exponent Size (capacity) of asset B Size (capacity) of asset A Cost of asset B Cost of asset A = = x x Learning Curve: learning curve exponent

ENGINEERING ECONOMICS 115 DEPRECIATION Straight Line D n CS j = - n Accelerated Cost Recovery System (ACRS) Dj ~ ˆ˝ ˘ C- ˙ ˘ˆ˜˘ ˆ˝ ˘ ˘ ˙˘ˇ˛ Sum of the Years Digits D j nj CS 2 j j n n 2 = +--= _i! BOOK VALUE BV ~ ˙˝˘ X Σ D j TAXATION ˚˝˘˜ # ˝ ˝ ˘ # ˙ ˝˘˜ ˛ Taxable income is total income less depreciation and

viii Formulas Compound Interest i = Interest rate per interest period. n = Number of interest periods. P = A present sum of money. F = A future sum of money. A = An end-of-period cash receipt or disbursement in a uniform series continuing for n periods. G = Uniform period-by-period increase or decrease in cash receipts or disbursements. g = Uniform rate of cash flow …

EECE 450 — Engineering Economics — Formula Sheet Cost Indexes: Ordinary Geometric Gradient Annuity: Cost at time A Index value at time A = Cost at time B Index value at time B 1 − (1 + g ) n (1 + i ) − n P = A1 ; i ≠ g i−g Power sizing: Cost of asset A Size (capacity) of asset A = Cost of asset B Size (capacity) of asset B x = power - sizing exponent x Learning Curve: TN = …

This document provides formulas and definitions for various engineering economic calculations. It defines terms like present worth, future worth, uniform series, sinking fund, capital recovery, depreciation, inflation, bonds, rate-of-return, benefit-cost analysis, and break-even analysis.

In section 3.3, we discussed the four key principles of economic equivalence. We need these when analyzing cash flows and evaluating economic equivalence. There are several cash flow patterns that frequently occur. Fortunately, equations have been developed to facilitate the cash flow analysis. We refer to cash flow patterns as series.

Engineering economics - cash flow diagrams, present value, discount rates, internal rates of return - IRR, income taxes, inflation. Net income vs net investment. A bid work flow template - Online with Google Docs. Calculate and compare the costs between owning a new vs. an old car. The future value of money.

Superposition principle can be used to modify cash flow descriptions to fit standard form. 1. Arithmetic Gradient Present Worth Factor. What is the effective interest rate per month? What is the nominal interest rate per month? What is the effective interest rate per year? Does (F/A, 12%, 30) = (F/A, 1%, 360)?

In this example we can use equation [1] to determine the future value at the end of one quarter by setting t = 1⁄4 year. (Note that this result is the same as using equation [2] with a quarterly interest rate computed as the annual interest rate divided by 4 quarters per year.)

Industrial Engineering Engineering Economy Review. 2 Main concepts n Models are approximations of reality (THINK) n Time value of money, cash flow diagrams, and ... is used in formulas: i=i P=(1+ i s)m-1 i=i P=(1+r P/m)m-1 i s=interest per subperiod m=number of subperiods in period P r P=nominal interest per period P