RATE OF RETURN ANALYSIS
Recall that an interest rate must be assumed in order to compute the present
worth (PW), equivalent uniform annual worth (EUAW), or future worth (FW) of
a series of cash flows.
MORE ON PRESENT WORTH
& EQUIVALENT UNIFORM ANNUAL WORTH ANALYSIS
In this presentation, we continue discussing the use of present worth (PW) and
equivalent uniform annual equivalent worth (EUAW) to eva
COST ESTIMATION
Recognize Problem/Opportunity
Define the Goal or Objective
Assemble Relevant Data
Identify Feasible Alternatives
Select Decision Criterion
Motivation/Perspective:
The major emphasis o
Example: Loan Repayment
Suppose you were to borrow $5,000 for 5 years from a bank at an effective
annual interest rate of 8%.
Which of the following 5 repayment plans would you prefer?
1. Repay $7,34
INCREMENTAL RATE OF RETURN ANALYSIS
When there are two (or more) investment alternatives that are being compared on
the basis of their internal rates of return, the preferred alternative is (of course
MODIFIED IRR
One difficulty associated with rate of return analysis is that there may not be a
unique value of i that makes NPW or EUAW equal to zero.
Consider, for instance, the cash flows associate
A Motivating Example
Example: Making Regular Payments
Suppose you elect to deposit $200 per month into a Individual Retirement
Account (IRA) that is currently paying 3% annual interest, compounded
mo
COMPARING DECISION ALTERNATIVES
Fundamental Idea: We will compare the costs and benefits of decision
alternatives by comparing the economic worth of their associated cash flows
over their respective l
Or did you?
Not if you want it today!
Annuity Option: 26 annual payments of $961,538, starting right now
Each payment 1/26 of $25,000,000 total = $25,000,000
Cash Option: A one-time, lump-sum payment
EXAMPLES: REPEATED CASH FLOWS
While the main focus of Chapter 4 is on the development of compound interest
factors for repeated cash flows, it also contains a number of useful ideas and
examples.
Thr
CHOOSING THE BEST ALTERNATIVE
Recall the following situation in which a coal-processing plant can purchase an
electromagnet that would save $1200 per year by picking up scrap metal in the
coal.
The e
This course attempts to provide a systematic approach for comparing investment
alternatives with respect to their economic merits.
Our focus will be on problem solving or decision making situations th
In this course, the construct we will use to portray the costs and benefits that are
realized over time is a cash flow diagram:
Depicts the amounts of money that are either paid out or received over t
ENM 500
Suggested Problems #1 even Solutions
2-28
55, 23 and 85
2-46
a) 256
b) 128
2-58
a) S = cfw_1,2,3,4,5,6
b) 1/6
c) 2/6
d) 5/6
2-78
a) 0.74
b) 0.26
c) Not ME
2-104
a) 0.0736
b) 0.101
c) Late larv
Department of Engineering Management & Systems
University of Dayton
ENM 500 Probability and Statistics for Engineers
Charts and Graphs Class Activity
Data Sets
Coin Flip Data
This data should be enter
Department of Engineering Management & Systems
University of Dayton
ENM 500 Probability and Statistics for Engineers
Charts and Graphs Class Activity
Introduction
Charts and graphs display large amoun
Probability I
ENM 500
PROBABILITY AND STATISTICS FOR ENGINEERS
Learning Objectives
At the end of Probability I and its associated activities and
assignments, students should be able to:
1. Understand
Team Members:
Department of Engineering Management, Systems & Technology
University of Dayton
ENM 500 Probability and Statistics for Engineers
Syllabus Class Activity
Submission Guidelines
Students wi
Block II. Linear Systems Self-Test
1. A straight line passes through the points (2,5) and (1,7). What is the slope of the line?
2. Solve for w and z : w 2z 3 = 0
2w + 2z + 6 = 0
3. The following syste
Block I. Algebraic Self-Test
1. Solve the following equations:
a.
3 1 3x 2
x 2
4x
b.
6
7
2 1
12 x 6 x 3x 5
2. If an automobile averaged 40 miles per (mph) for 45 minutes and 50 mph for 1.5 hours,
ho
A Little Set Theory (Never Hurt Anybody)
Matthew Saltzman
Department of Mathematical Sciences
Clemson University
Draft: December 12, 2005
1
Introduction
The fundamental ideas of set theory and the alg
ENM 503 Block 1 Algebraic Systems
Lesson 4 Algebraic Methods
The Building Blocks Numbers, Equations, Functions, and
other interesting things.
Did you know? Algebra is based on the concept of unknown v
ENM 503
Lesson 1 Models and Methods
The whys, hows, and whats of
mathematical modeling
A model is a
representation in
mathematical terms of
some real system or
process.
A Model Defined
A model is an
ENM 503
Block 1 Algebraic Systems
Lesson 2 The Algebra of Sets
The Essence of Sets
What are they?
1
Set Theory
Theory: A formal mathematical system consisting
of a set of axioms and the rules of logi
ENM 503 Block 1 Algebraic
Systems
Lesson 3 Modeling with Sets
Sets - Why do we care?
The Application of Sets a look ahead
1
Some Uses of Sets
Logic analyzing complex relationships
Optimization defin
Engineering Analyses Methods
and Models (ENM 503)
Lesson 0 - Course Introduction
A preliminary course in the mathematical methods
and models used in the formulation and solution of
problems found in e
ENM 503 Block 1 Algebraic
Systems
Lesson 5 Algebraic Models
Relive those old college algebra days when
solving an equation was childs play
1
The Road Ahead
is not always linear
Mall Mart Discount Sto