Name _
HW 1
IT 45000 Div _
Fall 2012
Dr. Sutton
IT 45000 Production Cost Analysis
HW 1
Page 2 of 4
1. What evaluation criterion is used in economic analysis?
2. What is meant by the term intangible factor?
3. Interest is the manifestation of what general
Name _
HW 2
IT 45000 - Div _
Fall 2015
Dr. Sutton
IT 45000 Production Cost Analysis
HW 2
Page 2 of 5
1. What simple interest rate per year is equivalent to a 12% per year compound interest rate over a 15year period?
2. How much could Tesla-Sino Inc., a ma
IT 45000 Production Cost Analysis
HW 2
Page 2 of 5
1. What compound interest rate per year is equivalent to a 12% per year simple interest rate over a 15year period?
F P(1 i) compound
F P(1 ni) simple
setting both equal to each other:
n
P(1 i)n P(1 ni)
(1
Name _
HW 3
IT 45000 Div _
Fall 2012
Dr. Sutton
IT 45000 Production Cost Analysis
HW 3
Page 2 of 5
1. The cost of energy for operating high-lift pumps in a water distribution system was $1.4 million for
the first three years. Beginning in year four, the c
IT 45000 Production Cost Analysis
HW 1
Page 2 of 4
1. What evaluation criterion is used in economic analysis?
Financial units are the criterion used in economic analyses the lowest cost or the highest revenue.
2. What is meant by the term intangible facto
Name _
HW 2
IT 45000 - Div _
Fall 2012
Dr. Sutton
IT 45000 Production Cost Analysis
HW 2
Page 2 of 5
1. What compound interest rate per year is equivalent to a 12% per year simple interest rate over a 15year period?
2. How much could Tesla-Sino Inc., a ma
Name _
HW 6
IT 45000 Div _
Fall 2012
Dr. Sutton
IT 45000 Production Cost Analysis
HW 6
Page 2 of 5
1.
In the annual worth (AW) method of comparing alternatives that have different lives, why do you calculate
AW of the alternatives over their respective li
Name _
HW 5
IT 45000 Div _
Fall 2012
Dr. Sutton
IT 45000 Production Cost Analysis
HW 5
1.
When evaluating projects using the present worth method, how do you know which ones to select, if alternatives are:
a.
3.
Independent?
b.
2.
Page 2 of 5
Mutually exc
IT 45000 Production Cost Analysis
HW 3
Page 2 of 5
1. To improve crack detection in aircraft, the U.S. Air Force combined ultrasonic inspection procedures
with laser heating to identify fatigue cracks. Early detection of cracks may reduce repair costs by
IT 45000 Production Cost Analysis
Course Syllabus
Fall 2015
MWF 2:30-3:20 WTHR 320
Dr. M. J. Sutton
339C Young Hall
494-1100
Email: suttonmj@purdue.edu
Office Hours: M & Th 10:30-12:20
Course Description:
An introduction to financial statements and to the
IT 45000 Production Cost Analysis
HW 1
Page 2 of 4
1. What evaluation criterion is used in economic analysis?
Financial units are the criterion used in economic analyses the lowest cost or the highest revenue.
2. What is meant by the term tangible factor?
IT 450 Maymester 2016 Lecture notes Chpt 1
Vocabulary
Engineering economy:
A collection of techniques that simplify comparisons of alternatives on an economic basis.
Alternatives:
Cash Flow:
A stand-alone solution for a given situation.
The estimated inf
IT 450 Maymester Lecture notes Chpt 3
Agenda May 24, 2016
Chapter 3 Nominal and Effective Rates
Definitions
All tables are based on effective rates. So far, we have been working with
interest rates where it was assumed that we were using effective rates
IT 450 Maymester Lecture notes Chpt 2a
Agenda May 19, 2015
Quiz Chapter 1
Review of Blackboard Resources
Chapter 2 Single payment factors and Uniform Series Factors
Single Payment Formula
Amount of money F accumulated after n years (or periods) from a
IT 450 Maymester Lecture notes Chpt 3b
Agenda May 25, 2016
Chapter 3 Continual Compounding
Chapter 3 Payment periods
Chapter 3 Equivalence calculations with PP and CP
Continuous Compounding
As m increases (semi-annually, quarterly, monthly, weekly, dai
IT 450 Maymester Lecture notes Chpt 2c
Agenda May 19, 2016
Chapter 2 Multiple Factors and shifted series
Shifted Series
What happens when a uniform series does not begin at year 1?
Present Worth Shifted Gradient
Calculate the present worth (P/A) one peri
Compound Interest
P = $10,000.00
n = 24
i = 0.50%
F = ($11,271.60)
Simple Interest
P = $10,000.00
n = 24
i = 0.50%
F = ($11,200.00)
Compound Interest
P = $10,000.00
n=
i = 0.50%
pmt =
n
int
prin
0
1
$50.00
$393.21
2
$48.03
$395.17
3
$46.06
$397.15
4
$44.0
IT 45000 Production Cost Analysis
HW 1
Page 2 of 4
1. What evaluation criterion is used in economic analysis?
Financial units are the criterion used in economic analyses the lowest cost or the highest revenue.
2. What is meant by the term tangible factor?
IT 45000 Production Cost Analysis
HW 4
Page 2 of 5
1. Convert an interest rate of 1.5% per month into a nominal interest rate over the following time periods:
(a) quarter
1.5% mo 3 mo qtr = 4.5% per qtr
(b) year
1.5% mo 12 mo yr = 18% per yr
(c) semiannua
IT 45000
1.
Multiple Factor Worksheet Solutions
Dr. Sutton
Locate the present value of each annuity at t = 0:
A(P/A, 8%,12) = 309(P/A, 8%, 5)(P/F, 8%, 14)
7.5361A = 309(3.9927)(.3405)
7.5361A = 420.0419
A = 55.74
2.
A = [1000(P/A, 10%, 5) + 10,000(P/F, 10
IT45000Exam2Review
SampleProblems
1. Determinetheeffectiveannualinterestrateof10percentperyearcompoundedweekly.
2. Ifanominalinterestrateof8%iscompoundedcontinuously,findthe
a) Uniformendofyearamountfor10yearsthatisequivalentto$8000attheendofyear10.
b) Eq
IT 45000
Dr. Sutton
Capitalized Cost Matrix
Cash Flow Type
Case
Present Worth
PW =
A
i
PW =
A(P/F,i,n-1)
i
PW =
P(A/P,i,n)
i
PW =
A begins at t = 1
F(A/F,i,n)
i
PW =
X(P/F,i,t)(A/P,i,n)
i
Recurring
(Costs to Capitalize)
Annuities
A begins at t = n (where
IT 45000
Dr. Sutton
Calculating
Effective Interest Rates
Flow Chart
Start
Identify the payment period, (PP)
[how often do cash flows occur?]
Identify the
compounding
period (CP)
Typically, cash flows in IT 45000
will not be of this type. We will deal
with
IT 45000
1.
Multiple Factor Worksheet Solutions
Dr. Sutton
Locate the present value of each annuity at t = 0:
A(P/A, 8%,12) = 309(P/A, 8%, 5)(P/F, 8%, 14)
7.5361A = 309(3.9927)(.3405)
7.5361A = 420.0419
A = 55.74
2.
A = [1000(P/A, 10%, 5) + 10,000(P/F, 10
Multiple Factor Problems
IT 45000
Dr. Sutton
1.
How much should be deposited each year for 12 years if you wish to withdraw $309 each year for 5 years,
th
beginning at the end of the 15 year? Let i = 8% per year.
2.
Maintenance costs for a small bridge wi
Name _
HW 1
IT 45000 Div _
Fall 2015
Dr. Sutton
IT 45000 Production Cost Analysis
HW 1
Page 2 of 4
1. What evaluation criterion is used in economic analysis?
2. What is meant by the term tangible factor? Give an example.
3. Interest is the manifestation o