ENGINEERING ECONOMY

Simple Interest




Compound Interest

Continuous Compounding

ENGINEERING ECONOMY

Rates of Interest:

Nominal compound interest

Effective actual interest in one
year
(

Effective compounded
continuously

ENGINEERING ECONOMY

Ordinary Annuity payments at
end of each period

Deferred Annuity first
payment made later

ENGINEERING ECONOMY

Annuity Due payments at start
of each period

Perpetuity payments extend
forever or continue indefinitely

ENGINEERING ECONOMY

Capitalized Cost application of
perpetuity; sum of first cost and
present worth of all future
payments which is assumed to
continue forever

ENGINEERING ECONOMY

Depreciation: Straight Line
Method cost of property varies
linearly with time

Depreciation: Sinking Fund
Method imaginary fund called
sinking fund is invested yearly at
rate to amount to

ENGINEERING ECONOMY

Depreciation: Declining Balance
Method constant percentage
or Matheson formula
*k = 2/L for double DDB

Declining Balance

Double Declining Balance



(

ENGINEERING ECONOMY

Depreciation: SYD varies
directly to number of years and
inversely to SYD

)
(

)

Sum of Years Digit