Lecture 19 - Engineering Economics

Lecture 19 - Engineering Economics - 4/21/2010 Engineering...

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4/21/2010 1 Engineering Economics Engineering Economics How You Will Benefit From this Material What factors influence economic decisions? Would a decision today be better put off until later? Connecting to Your Background You charge $350.00 dollars worth of merchandise to your credit cart. The APR for this bank’s card is 15.5% If the minimum payment per month is $10.00 how long will it take you to pay it off?
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4/21/2010 2 Choices $10,000 Today? Do I take the $10,000 and spend it today? Do I take the $10,000 and put it in the bank for one year? $833.33 for 12 months? Will I make more money by dividing it up into monthly deposits? Choices Options 1 and 2 Question 1: take $10,000 and spend it today? $10,000 today is worth $10,000 today Question 2: put the $10,000 in the bank for 1 year? Interest rate is 0.02 (2.0%) per year F is the future worth of the principle i is the interest rate (the cost of money) n is the number of times the given interest rate is compounded ( ) * 1 n F P i = + ( ) 1 $10,000* 1 .02 $10,200 F F = + =
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4/21/2010 3 Choices Options 3 Question 3: Take $833.33 each month for one year
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This note was uploaded on 02/09/2012 for the course ENGR 160 taught by Professor Sengupta during the Spring '07 term at Iowa State.

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Lecture 19 - Engineering Economics - 4/21/2010 Engineering...

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