Professional Documents
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FE Review: Engineering Economics
FE Review: Engineering Economics
Engineering Economics
Compounding Annually
F = future worth
P = present worth
i = annual interest rate
n = number of years
Compounding periodically (non-annual)
=
• If compounding annually
• F = $1,000(1+0.1)6 = $1,771.6
• If compounding monthly
• F = $1,000(1+0.1/12)6*12 = $1,817.6
Cash Flow
Cash Flow – Uniform Series (A) vs. Gradient
(G)
1 i n 1 n
P G 2
n
i 1 i i 1 i
n
1 i n 1 n
F G 2
i i
Uniform Cash Flow Example
Gradient Cash Flow Example
Depreciation
• Goods reduce value over time
Depreciation – Straight Line
• Annual depreciation amount