Professional Documents
Culture Documents
Foundations Of
Engineering
Economy
Engineering Economy
7th edition
Leland Blank
Anthony Tarquin
1. Role in decision
7. Economic equivalence
making
8. Simple and compound
2. Study approach
interest
3. Ethics and
9. Minimum attractive
economics
rate of return
4. Interest rate
10. Spreadsheet
5. Terms and symbols functions
6. Cash flows
Time
0 1 2 n-1 n
One time
period
F = $100
Show the cash flows (to approximate scale)
0 1 2 n-1 n
Cash flows are shown as directed arrows: + (up) for inflow
P = $-80
- (down) for outflow
2012 by McGraw-Hill, New York, N.Y All Rights Reserved
1-16
Cash Flow Diagram Example
Plot observed cash flows over last 8 years and estimated sale next
year for $150. Show present worth (P) arrow at present time, t = 0
Year
0 1
Rate of return = 10% per year
$100 now