INDE 301 Notes, Fall 2016

INDE 301 | ENGINEERING ECONOMY GHENA HAMMOUR By: beet Fthmmour ‘Chapter |_ Pourdlationis o& ee) neering Economy - | ee a Sree icks Brginwting. Gono | is ort ie Ress. OF nreking. Aeiions These clecasis inuolwe tne oadamerntal <lemmantts _ OF Cash Fladas oF Sp aies Gee break Raw, - a Tre. as main. 5G ascent ‘eck iA mal making €Coren tic decisions: A.Tf tne inpotis Afxocd (Axed cost) = Maumize tne ovtpor.. eer a ——_ “ _ Ex. Soy YOK ATE PMAvcicg P2Ns Od Yor hove oy budget of tbloo 1D pmdvce them — 5 our ty te Maximize the NoMber of PEAS paoducect (ostpot) ge the output is Axed — MaiMizetheinpot, ey * Ses. OU Want Xo Palint_A Capen, You de thet while 4sing the leost/minimMal ameont of paint 3.TF nesther the ootpo+ cor tne inpot_are. Aived then We tale _, mMeximon Loutpot— iaeoty. Esseqyhal kewords: : — LTpvestment. a a _ ; Cost. a L Usehy i Sie Be. an nvestment /payeck ——— : i L Munmoon Attache Rate of Rotuca (QuaRR) / Sarasce Rate / “Hurdle sate. L Sokiage Vole = p By: Ghena Hammour _Trvestmenths Using @pitals oF money or funds te generate wpevenues Cleenefits) or prude a sernce. EX: Say Yor ovo A COMPA AD Inve Stet Mighat be when Gos bury compuice for Your Emplayece, _ 6 _winen_ 404 proude ‘thenn_catin tefre somes. Note thet you _mignt not lee able +p measure Host “anaes MISE Nects ALL passilole expenditures Ex: Tnital st, cpeceting Cost, maintenance Lesh, material cot, insviance cost-- — Usefu| life of an investment oc prmyect: Doterion Hine From the Start Hil the ead of AN WVeIMcAt a PMjech. — _- Minimum Mittachye Rate ©} Rotucn (ARR) /disooatrar, __ Lowest cate accapted on the semuras of a.pmyect ac hawestment —_ Tr 16 also the fae by which we disoonttre_ cash Floud of the saves ment . tx Soy up have Come arnoant 4 money clepos'tHeel 1A the Yank. thet gives you Si optim Maur opt ao Omject 40 (Ovest tas magne worth afete of AY. Nou vomnt ogres because yn oh a min« Retucn (ate ef S7. By: Ghena Hammour is Salvage Naluc: a _—s The Value we Get from an asset aftecospeciAech Perial oF Usage . EX. sey yeu goto neD Car bc 30,D00 agter Some years You uy it foc _12jan0 & Solioga Niolue : _ DeAnitoms: Cash Flo: eS ae —_ & cash Flaa_ \s_a Bane graph_or diagrann that kKoeps _ Wack, of aU Cosh teansachma within “nm periods or intervals o4 equal fare. most comment n=1 year) Tn Gastrucing Casin Floods , we adopt end of perind CoONmean an. Anat is) all transachans Witten a ceciod a _ ane reforted arte end of the period. RoVirk Qo ee Cush Faas witla the Sane number of: eopal periods Can ___ be addecl_ and sudvatted. Ee is ie " a Se —— A\e ies ‘so. t = ‘ 3 \ 2 3 oO 1 2 EY So ag y lop 3° _ So 30 = ©» By: Ghena Hammour __Therect Bate. Per Sebinet ees + cateo} return. ™ _Ghore is. aclualems, doha trem , dopenctina, From Anich_ — — Preece. we are (aking | ac. caer ban itor tha cushone) _ Takers: tale exc sila ompontopdalot_ - - Oniginal debt AGHA cabot: a 7 tates: a a Nou ade ty pan abloa al “the_enctcé Teaioogt* ———— fra loan, oP WICco . ——_-—- == L what iS the \ntecest- woke perycar cxrorgect? Ma, The bank) — i. — — Tei falc pps =fuse_= ses — X1CO_ = 1O*/ a Meimal atbractwe., cate ef cerunn; 7 Whee is ro “golden Mle fortinat becuse many a __thwngs Cont oe Colcutated bout are Taitther_ eS tea : Th is Sy ‘\owect ale, _accopledt athe PIU ak An investment ee iis bighelthin the fale afc py te ct is seeale Heol ied oy the Fenncial. ondlysts ty fachictes. a eeu facto Ltr mh) pi fom meee Ao ancthut =_ Ss | wane —- Ceidt cal WAaR Can ke calebatat OD a wey nicl On - ek te be try pate of cchom. pec /periad [3 Lechine 2 By: Ghena Hammour Thad te Clete tre cial WARE? Ps 5 ror ed Se: prnccitac. ot analy Cag Fords ier ie 5 the cash fonds. jer Lo be the \aterest “ate /pertoet, charge om Biel clebt fonchon. —_ _ [ease MARQ = vita Example. = Por a eyjwen Ameeneer: os rt 15,000 aig GVYA\Lalole- Cosin. is a 500d ea ine interest ak ae a Year. the ablojooo._are-te_be horteedsect, Ab BS). ayeot._ | __lentical MARR = Kiet TRV AG = £21M0-1 Pmporhon of} Cash fonchon _ biivoad MARR- ‘} i Wink is tie CAR cal MARR? Bad \3)000 i = BY srerurn Cate pec penoct ae | be = B/. ; inlerest_ cote /peciod clnarge.on she dsbeninetinn: Eaacal MeR’ - = 4.6%) + + C=L\(gy) | = (0.08) + 3 (6.08) - oot By: Ghena Hammour Tine Nalue. ef MoNer4. ; Tntcest and Interest facters — Aniecs + _____ Simoele lil Interest obiscete._ ‘ see Compounding erponding Sonole Thteest: —Totaest. is Paid at the eee of each penod on ne angina) som _ Of nraney cal. - EB Xi say yor hove 41000 a aining an iarere lof 10%. : [Arte end of | Year aco Pt the end of Pa _ Example. Ve interest rate _{ Per fetiod 241200 Cadd (00 ony anginal - Pi _ongina) _som_of Mane, Te Q - he fudare, Valu. Pp! ah ee Compound Tnterests Trees 's_ paid on eained \niccesi, Discrete compacting Anerest \s Paid discretely at the ead of each petiock. By: Ghena Hammour Discrele. Grponding, factors _0 e_cCose_ of aingle Payot. ui interwat tate./periacl | 9s OngineL BLM 2} Ong. = — : gs Ruture_ Velie. ec upoyHhn Pp a - _ ——_ _E&ad £ ered | Nalue | Sriginal masat__+ _onginal Sane Cted tp inreccsy | Oe typ | p+ Usp : ee Se SO: Ses ee 20.88 ew A ir a Wadyp | Mis eypust ue pe a cyio The teem _ 141)" is cate the Astute sancth ctor of a Single payment Compaoundect_atthe tate _U/perlocd Coen’ perices symbol + CF LPO) read asi f given prranda @ What if we ont to And she orignal som 02 _ P= (i> Lye ix - The Acom C+) is called _presentutarts facto oh a _forure_Nolue onder discrete compounding. atthe rae. U/penod. 7 path symbol + (PE, tim) read as: Paiven 3.00 By: Ghena Hammour CT Amew tomo — We. “‘Oomver CF periods rtakos. aso of moneig ete tn deol. onder. pias Otte tale. L/ pera. _ is 2 7S anh 58 Fn —— a ~ Dawe did that coe er Uap = ae | _ nbn (itt) = laa = >. N= OX ~% Lana —— ———$———$—<— nt tm SY aa ee ee nhc) L-E 0 ale. ee es a = ae ‘ — a Aide Nole 1 Indi4x)= x age — _Sxample. a Se a : ____Pe_pefson horas F450 Fan 2 loank and _ Onyrees “TO repouy, the worle debt after tre years. TW interest Charged on tine cay is %% compoondecl = — QnA Nad noe sould ne pessoa Poy? a ———o SSS SO a ih What sunn.of erongy PS: ‘is Sec 0 & 8250. nwo yeas oa frm Pavd_, 1F Whe interes _qauned is Hyper month —_Compooncled_ reo: month. RS ne a RT lp. 4 ty —— = U4 Any eaN0 te ee B405a53985 By: Ghena Hammour AL ab\000_can be borrowed at O fate of Ive oO anon —compoonded _mnantiaiy for_one . — __ TAA saw amount can be. bonmuect for on2..Yyeor oe - \a"h a year. ‘Much Guid be. saved in nierst Cc e, -peangea eS aa eee TT eis Ten = bie l% Nee 4: Va Mal | | [Fat sty tf = (900 (E\P 14,12) fe Loan GF, IP, Zz, Kis - = (\+ \% )x logo ; J,= 412%) x lao de llth —_ Fra ll204 5 Amoont saved ‘is a4 \laddlole_ rates ancl tne. equivieleat. onifoon. rate. | int Se | ae Sea ae ae |e = — ir anced 6 = Letty C4) = $s Ole - 2aycaie oth cides, re 7 URES Me cle ek teal Usp = wir ieto —— = at C+ uy Litt s Lt les\® F fe Vator Gans Uae BC Toeometnic Mead