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Lecture 19 - Engineering Economics

# Lecture 19 - Engineering Economics - Engineering Economics...

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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 = + =
4/21/2010 3 Choices Options 3 Question 3: Take \$833.33 each month for one year

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Lecture 19 - Engineering Economics - Engineering Economics...

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