SCHOOL OF CIVIL, MINING AND ENVIRONMENTAL ENGINEERING
MINE412 MINING ECONOMICS
INTEREST RATE TUTORIAL PROBLEMS 1
1.
Compare the interest earned by $100 for 10 years at 8% interest simple interest with
that earned by the same amount for 10 years at 8% comp

School of Civil, Mining and Environmental Engineering
MINE412 MINING ECONOMICS
NOMINAL/EFFECTIVE INTEREST RATES
Note:
Nominal interest rate can be found for any time period which is longer than the originally stated period
by using Equation (1)
Nominal in

School of Civil, Mining and Environmental Engineering
MINE412 MINING ECONOMICS - INTEREST TUTORIAL PROBLEMS # 5
Use EXCEL to solve the following twelve problems:
1
Mary wants to purchase a previously owned compact car for $8500. She plans to borrow the
mo

School of Civil, Mining and Environmental Engineering
MINE 412 MINING ECONOMICS
EXCEL FUNCTIONS PERTINENT TO ENGINEERING ECONOMY
DB (Declining Balance)
Calculates the depreciation amount for an asset for a specified period n using the fixed decliningbalan

The Time
Value of $
UNIVERSITY OF WOLLONGONG, Australia
INTRODUCTION 1
$1 in hand today is worth more
than $1 promised at some time
in the future
z You
could earn interest while you
wait
z $1 today would grow to more than
$1 later
INTRODUCTION 2
The trade

School of Civil, Mining and Environmental Engineering
MINE412 MINING ECONOMICS
INTEREST RATE & TIME VALUE OF MONEY- 2
1. What is the present worth of a future cost of $7000 in year 20 if the interest rate is 15% per year?
2. How much money could you affor

UNIQUE CHARACTERISTICS
OF MINING INDUSTRY
Highly regulated
safety
Environmental sensitivity
Capital intensive
NonNon-renewable resource
Risky
financial
geological
ENGINEERING ECONOMY AND
THE DESIGN PROCESS
An engineering economy study is
accomplis

MINE412 Mining Economics
The Time Value of Money
Introduction:
If it were not for the existence of interest, the analysis of investment opportunities would be
greatly simplified. In the absence of interest, investors would be indifferent as to when cash o

8/7/2010
UnderstandingMoneyandIts
Management MainFocus
1.Ifpaymentsoccurmorefrequently
thanannual,howdoyoucalculate
economicequivalence?
2.
2 Ifinterestperiodisotherthanannual,
If i
i di
h h
l
howdoyoucalculateeconomic
equivalence?
3. Howarecommercialloan