If you are taking Engineering Economics course and you end up in this Channel, YOU FOUND THE WAY! I got my grades back this week and the course ( ENGG ECONOMICs) I thought i will fail, ended up boosting my GPA. I did all the series in this channel twice just 2 weeks before my final exam. My final exam was 50% of the course and a must-pass-one. Bro I killed it! All with the help of ENGINEERING ECONOMICS GUY. Thanks to him. He is a good example of selfless individuals who transform the society ( students). I kept asking questions whenever i was in doubt. He responds instantly with a clear explanation. ALL FOR FREE! Thank you so much. I ended up loving it. The knowledge is practical as well. ENGINEERING ECONOMICS GUY. I can’t thank you enough. I LOVED YOUR TEACHING STYLE. You made Everything easy!
@EngineeringEconomicsGuy3 күн бұрын
Wow! Thank you for the great endorsement!! I'm so glad you did well in your course. Congratulations and all the best for the future!
@loganwashere2411 күн бұрын
Is the reason we use the flow tube and number of drop ratio here because we do not have a length given to us? Otherwise it would just be delta_h/delta_L correct?
@EngineeringEconomicsGuy10 күн бұрын
...no, not really, but I'm glad you're thinking about it! The path the water follows through the flow net has a different length along each flow-path. The trick to understanding a flow net is to realize that the volume of flow per unit time through each of the flow channels (tubes) is the same. Notice that the tubes are smaller and shorter near the middle, and long and large near the outside. The equipotential lines show how the "difference" in total head is distributed between the two sides of the problem... I hope this helps. The flow through the soil can also be described by a partial differential equation, and the flow net is a kind of visual representation of the solution(s) to that equation. Hope this helps!
@TristanSimondsen14 күн бұрын
This will go down as the biggest hoax in mathematics history. What you illustrated was 3 different games where the prize didn't move, and you picked Door R in game 1, Door G in game 2 and Door B in game 3. Whereas in ONE game, which EVERY player will ONLY ever play, player has ZERO probability to PICK, OPEN and GET the prize behind whichever door Monty removes entirely. The Monty Hall Problem is not about the probability of picking a door from 3 and GETTING the car; it's ⅓ and no one disputes that. It's about player's capability to SWITCH, which in terms is literally PICKING and GETTING what's behind the other two doors without the car. Because player has the option to switch, that means we have to find X in not only one door, but all 3. You're using (1-X) as X for the no-car doors, and that's the genius of the creators to use two goats; two of the same items to trick you into thinking you have double the probability to get what's behind those two doors. Put a dog and a horse each in the other two doors and you will see it clearly - you have a ⅓ probability to pick the door with the car, open that door to get the car, ⅓ probability to pick door with the dog, open that door to get the dog, and a ⅓ probability to pick the door with the horse, open that door to get the horse. Let's call the player "Max": Max picking Door A, opening Door A and getting the car behind Door A ½ Max picking Door B, opening Door B and getting the car behind Door B 0 Max picking Door C, opening Door C and getting the car behind Door C ½ Max picking Door A, opening Door A and getting the dog behind Door A ⅓ Max picking Door B, opening Door B and getting the dog behind Door B 0 Max picking Door C, opening Door C and getting the dog behind Door C ⅓ Max picking Door A, opening Door A and getting the horse behind Door A ⅓ Max picking Door B, opening Door B and getting the horse behind Door B 0 Max picking Door C, opening Door C and getting the horse behind Door C ⅓ As you can see, in one game, one of the doors will have ZERO probability for the player pick, open and get whatever item is behind Door B, which was removed entirely by Monty. Therefore player has a ½ probability to pick the door with the car, open the door to get the car if he decides to stay, or switch to pick the other remaining door, open that door and get the car. Alternatively, player has a ⅓ probability to pick the door that has either the dog or the horse, open that door to get either the dog or the horse, or switch to pick the other remaining door, open that door and get the dog or the horse. Bottom line is, player has an EQUAL probability to stay or switch to get whichever is the item behind the door he ultimately opens. Half if it's the car, one-third if it's dog/horse. In 1975, Paul Erdos, the "Albert Einstein of Mathematics", only relented to the imbecilic ⅔ claim because all the simulations were showing him ⅔ switch. In 2024, we have ChatGPT, Python and other AI to play with the coding and discover the flaw. Apparently, "picking" the door is not the same as "pick the door with the car, being able to open that door and get the car". Don't believe me? Simulate it yourself and allow Monty to have the ability to also remove the door with the car. You still have a ⅓ probability to "pick" the car and ⅔ probability to get the car if you switch. INSANITY! For the purpose of those who want "trends", which really doesn't apply to ANY player's chances realistically, here's the outcome if the game is simulated more than 3 times: ⅓ (Max's probability of picking Door A, opening Door A to get the car) ⅓ (Max's probability of picking Door B, opening Door B to get the car) ⅓ (Max's probability of picking Door C, opening Door C to get the car) ⅓ (Max's probability of picking Door A, opening Door A to get the dog) ⅓ (Max's probability of picking Door B, opening Door B to get the dog) ⅓ (Max's probability of picking Door C, opening Door C to get the dog) ⅓ (Max's probability of picking Door A, opening Door A to get the horse) ⅓ (Max's probability of picking Door B, opening Door B to get the horse) ⅓ (Max's probability of picking Door C, opening Door C to get the horse) In these games, the probability is ⅓ because Max's initial pick is random, and Monty’s elimination process does not alter Max’s chances of picking, opening a door, and getting a specific item behind it. Vos Savant said of the thousands of letters that came in to dispute this claim, 65% were from mathematicians and university math professors. Right; they're ALL wrong. Now I know why the sims are always ⅔. This is for you, Paul. I'll take your word regarding math over a Sunday columnist for a celebrity newspaper magazine any day of the week. 🤙
@paulchen35516 күн бұрын
wow. I literally did the same mistake. Multiply the annual loss by 6 yr to equate the total loss of 6yr
@EngineeringEconomicsGuy16 күн бұрын
I'm glad you watched this video! I hope it made sense. Good luck with your course.
@paulchen35511 күн бұрын
@@EngineeringEconomicsGuy I am not actually in a course. I am an electrical engineer, and I figured I need to learn something about economics. Also, would you mind telling me what textbook you've been referencing in your videos? You sometimes hold it out during the recording.
@ibnuahmedbare120118 күн бұрын
Hello . Thanks for explaining this concept. You made it easier than I actually thought. It all became a punch of AW analysis other than the decision making strategy. Thanks again. I have a quick question, For the EAC O&M why don't we use arithmetic gradient calculation instead. taking G=50K A=340K+50K(G/A, MARR, 3) A=386,828 . that will give us a constant Annual value for the Costs, won't it? OR is it because am setting N=5..... am kinda stretching it more than it should have been when I do it for every year? I actually tried that when I paused the video first and ended up different values but don't know how. Should we always use the format in the video without G or g? please clarify THANKS IN BOLD! ------
@EngineeringEconomicsGuy15 күн бұрын
You can absolutely use an A/G compound interest factor to calculate the EAC-O&M. You could do this for the 2 year and/or the 3 years-of-ownership scenarios. I used the P/F twice, then used the A/P factor to arrive at, what should be the same answer you would get with an A/G + 340k. I suspect you might be having a problem with the bigger picture, i.e. - please make sure you understand that the columns labeled EAC in the table represent different "Scenarios of ownership". Meaning, the row labelled "2" is a "what if" scenario of 2 years of ownership. Row "3" is a scenario of 3 years of ownership. If you're ok with this concept then the rest of the table is just a time value of money and cash flow exercise. Hope this helps.
@ibnuahmedbare12014 күн бұрын
Thank you sir!!!
@ibnuahmedbare120121 күн бұрын
You made me crack🤣 when you said asking the student the Face value of the bond is will just be "an academically contrived" haha ... because the bond has to be printed with the value ... LOL
@EngineeringEconomicsGuy21 күн бұрын
Ha! I'm glad you got some enjoyment from an otherwise very dry topic! Good luck in your course!
@ibnuahmedbare120121 күн бұрын
This is amazing !!! I am enjoying the concepts now. wow! I have quick question here. For the effective interest rate, why are you not using the formula: ieff - (1+r/m)^K how is r/m=0.08? it kinda makes sense conceptually because the 8% annual "per year" but then how about the K? how is it 15. is it not suppose to be subperiods*15? I rewatched your other video about nominal and effective interest as well. while it was illuminating enough about this concept, I lost my thought process in this one. Thanks for the help. YOU are videos are amazing. I am glad I found this channel
@EngineeringEconomicsGuy21 күн бұрын
Glad you like the Channel! Yes, the problem in this video is a little unusual. It really hinges around the concept of the present value of a perpetuity. The 8% is an annual rate (it is both the nominal AND the effective rate since there are no sub-periods). The 15 is used to calculate a 'weird' effective-15-year-interest-rate. We need this because we have payments at occur once every 15 years. Give the video another try... the explanation is good. Good luck in your course!
@catarinastoever746321 күн бұрын
hi, when do we use a/p vs p/a in the time value of money factors? Thanks
@EngineeringEconomicsGuy21 күн бұрын
Use A/P when you know the P and you want to find the A. Use P/A when you know the A and you want to find the P. You can remember this with a trick: Think of the A/P, etc. as a fraction. Multiply P x A/P to find A (the Ps "cancel"). Hope that helps!
@paulchen35523 күн бұрын
the hard math isn't just the Calculus and Diffyq... Man, these Econ math is tripping me
@EngineeringEconomicsGuy22 күн бұрын
Hang in there! Interpreting the problem is often the most difficult thing in Engineering Economics. Once you understand the wording of the questions and the financial jargon, the math isn't that bad. Keeping watching KZbin videos! Good luck!
@binhle871026 күн бұрын
Hi Sir, If the question ask me to draw the cash flow diagram consider the present is end of 2015/beginning of 2016, so is the "year 0" 2015 or 2016? I'm a bit confused. Thank you so much for your super videos as always.
@EngineeringEconomicsGuy26 күн бұрын
Good question. From the sounds of things you may need to carefully distinguish between a 'point in time' and a label for a 'time period' - in this case a 'year'. On a Cash Flow Diagram the 'end of 2015/beginning of 2016' is a specific point-in-time and you can draw the cash flow arrow at this point. "Time t=0" would be at this specific point - imagine it is midnight on Dec. 31st, 2015. 2015 ends at exactly the same time 2016 begins. However, if you need to label "YEAR 0", this would be all of 2016. All of 2015 would be YEAR -1. It may be that your problem is poorly worded. It is most likely that the problem is referring to a 'point-in-time'. Hope this helps.
@binhle871025 күн бұрын
Yes I agree the question is poorly worded. So I think it's safer if we can put it like you said as 2015 is year -1 and 2016 is year 0 and write down the explanation. I think it would make more sense thab to mark 2015 as year 0 when the present is the end of it. Thank you Sir, much appreciated.
@Dan-yw7sy26 күн бұрын
this is the video i needed to see. thank you. quick, to the point. :) for math nerds, this is simply a "negetive compounded interest" equation. see also [my portfolio performance in my margin trading act.]. hahaha
@EngineeringEconomicsGuy26 күн бұрын
Yes, you could absolutely look at it like "negative compound interest". Sorry about your rate of return! Hopefully things will get better. Good luck in your course!
@Leeshixo26 күн бұрын
Best video ever! Thank you kind sir ❤
@EngineeringEconomicsGuy26 күн бұрын
You are most welcome!
@ibnuahmedbare120129 күн бұрын
I have a quick question here: we we push everything to P and then find F? I was doing something like: 1500(A/F,0.5,3)(P/A,0.5,3)(F/P,0.5,8) ?
@EngineeringEconomicsGuy28 күн бұрын
You could do something similar to what you've described but it would look like this: 1500 (A/F, 0.5%, 3) * (P/A, 0.5%, 24) * (F/P, 0.5%, 24) However, it would be easier to just calculate the FV directly from the equivalent monthly annuity like this: 1500 (A/F, 0.5%, 3) * (F/A, 0.5%, 24) I hope this makes sense!
@binhle871029 күн бұрын
Hi sir, thank you so much for your videos, it helps so much for my exam. Just another dump question, I think, if the interests rate is 6% annual, isn’t the interest rate for a quarter is 1.5%. I know it’s not but I still can’t quite grab the concept of effective interest rate?
@EngineeringEconomicsGuy28 күн бұрын
In this problem the interest is 6% compounded monthly. In this case, the monthly interest rate is 0.5% (6%/12). This means the effective quarterly rate is (1 + 0.005)^3 -1, or about 1.5075125%. You should review my video on Nominal and Effective interest rates. I hope my other videos will help you.
@EngineeringEconomicsGuy28 күн бұрын
Here is the link: kzbin.info/www/bejne/l4WUn5KYl7aEmK8
@binhle871028 күн бұрын
@EngineeringEconomicsGuy thank you so much sir. I get it now after going through your Interest Playlist. You are literally saving me days of self studying.
@hennachung80Ай бұрын
If the gradient is negative, do we still calculate the same way ?
@EngineeringEconomicsGuy28 күн бұрын
Yes! Near the beginning of the video, I show an example of both a positive and negative growth rate. Simply use a negative value in the calculation of the i^0 interest rate and then use the resulting negative value in the formula. If you are asking about negative cash flows, then you simply use a negative value for the starting annuity. I hope this makes sense.
@tongnguyenthaongan8979Ай бұрын
I have less than a month left until the exam, and I'm not good at this subject. It's lucky for me that I met your videos. Thanks a lot.
@EngineeringEconomicsGuyАй бұрын
You are very welcome! Good luck in your course!
@ReyaziAcademyАй бұрын
Amazing lecturer ❤
@EngineeringEconomicsGuyАй бұрын
Thank you!
@ocengilbert122Ай бұрын
I thought we had two annuities hence i expected the first annuity at 10 years then the second at 20 years
@EngineeringEconomicsGuyАй бұрын
In this example, for the "Lawn Guy" mower, we do have 2 annuities. One goes from yr 1 to yr 10, the other goes from yr 11 to yr 20. We then find the 'PW' of each of these annuities, and their PW values are placed at yr 0 and yr 10. The value at yr 10 must then be 'moved' to yr 0 using the P/F factor. Watch the video again to better understand these details. From your comment, I suspect you might not be aware that the value of an annuity can also be positioned at it's 'beginning'...? Perhaps you should also explore some of my other videos in my Cash Flows playlist.
@Bebo991_GАй бұрын
wait, how are you writing inverted, is this an actual skill?
@EngineeringEconomicsGuyАй бұрын
Good observation. I'm writing the normal way and I'm using software to horizontally flip the image.
@tandyyАй бұрын
you may have just saved me a few hours
@EngineeringEconomicsGuyАй бұрын
Happy to help! Good luck in your course!
@2004PatilАй бұрын
Wonderful. Woah never thought this would be such a simple concept.
@EngineeringEconomicsGuyАй бұрын
Glad you think so! Good luck in your course!
@Reem.alhamimiАй бұрын
how this is not going viral!!!!! thanks!
@EngineeringEconomicsGuyАй бұрын
Ha! Thanks for the nice comment!
@Reem.alhamimiАй бұрын
WOW OWO OWOW Thanksssss!!!!!!!!
@EngineeringEconomicsGuyАй бұрын
You're welcome!
@connorshultz3108Ай бұрын
Very good video, thank you. Just a follow up question, if your project has daily/monthly expenses which you can model as annuities, how are these translated to an after-tax cash flow? For instance, operating expenses, salaries, etc.? Thanks!
@EngineeringEconomicsGuyАй бұрын
Assuming your company is profitable, the best method for converting expenses(such as the ones you describe) into 'after-tax' expenses is to simply multiply them by (1 - t), where t is the company's tax rate. Multiply any revenues by the same (1 - t) factor. Or, if you like, you can gather the expenses and the revenues into a net monthly cash-flow and just multiply this 'net' amount by (1 - t). I hope this helps!
@vanskis7618Ай бұрын
so drawing the flow nets is arbitrary? I can draw one with more drops or less drops?
@EngineeringEconomicsGuyАй бұрын
Yes. As long as you follow the rules for drawing the flow lines and potential lines, the 'ratio' of the number of flow channels to number of potential drops should be approximately the same.
@ibnuahmedbare1201Ай бұрын
the value of the asset at the beginning of year 2 is really 22000-(30% of 22000) = 220000-66000? the half year rule is a for the taxing and the not the market value of the asset at the beginning of Year 2. Or am I wrong? From the point of view of taxing I understand why you did 220K-33K because 33K is already claimed. but from the point of market value value of the bulldozer, does it make sense?
@EngineeringEconomicsGuyАй бұрын
This example is focused on depreciation for taxes and accounting purposes. If you are concerned about market-value of an asset, then you cannot use a simple mathematical method such as the method described in this video.
@dilrubaacpnar6811Ай бұрын
amazing video
@EngineeringEconomicsGuyАй бұрын
Glad you think so!
@guerrero-5410Ай бұрын
How can I obtain that quick reference guide for X percentage per formula (i.e., P/A, A/p) ?
@EngineeringEconomicsGuyАй бұрын
Good question. Google "compound interest factor tables". There should be lots to choose from. These tables can also be found in an Appendix to most Finance or Engineering Economics textbooks.
@robyaroundАй бұрын
you are single handedly saving my midterm omg, thank you so much!
@EngineeringEconomicsGuyАй бұрын
Happy to help! Good luck.
@mustafas_gitar2 ай бұрын
Isn't it 0.06/12 = 0.005 instead of 0.5
@EngineeringEconomicsGuy2 ай бұрын
Yes! However, 0.5% is the same as 0.005, but I can see the potential for confusion! Thanks for the comment.
@genetalavera42562 ай бұрын
It's a little weird not giving the equation for the a given g , i , n. I guess we have different schools though but for board exams we do not have the tables. Thanks for the explanation though
@EngineeringEconomicsGuy2 ай бұрын
You make a good point. I could have given the formula for the (A/G, i, N) factor! It probably comes up somewhere else in one of my other videos - BUT, for the benefit of anyone looking for it...it's a complicated one: [ 1 / i ] - [ N / (( 1 + i )^N - 1)] There are other forms, but this is the most compact. I will "pin" this comment to the top of the list so anyone looking for the formula can hopefully find it. Thanks for the comment. Good luck on your Board Exams!
@DagemawieMekonnen2 ай бұрын
you should post more I'm taking engineering economics at the university of Minnesota and I really appreciate your videos.
@EngineeringEconomicsGuy2 ай бұрын
Thank you for the encouragement! I'm working on it! I hope you've had a chance to explore all of my playlists for Engineering Economics. I should have videos coving all of the main topics. www.youtube.com/@EngineeringEconomicsGuy/playlists
@ayesigasteven80582 ай бұрын
simple, and understandable
@EngineeringEconomicsGuy2 ай бұрын
Thanks for the comment!
@fireboywithoutwatergirl2 ай бұрын
So in essence, because both simple linear depreciation and declining-balance depreciation both have constant rates of depreciation, the general formula is just BV_n=P(1-r)^n, where the only thing that changes is how you find r? What about ones where the rate changes like sum of the years or unit production? Do you have some videos on that? Thanks!
@EngineeringEconomicsGuy2 ай бұрын
Good observations. Just to clarify a bit; declining balance has a depreciation 'rate', but straight line depreciation is a constant dollar amount. I'm sorry but I don't have a video for unit of production or other depreciation methods... I should make one!
@fireboywithoutwatergirl2 ай бұрын
@@EngineeringEconomicsGuy makes sense thanks! Just had my midterm, the existing videos made a huge difference already! Look forward to the other ones hahah
@EngineeringEconomicsGuy2 ай бұрын
Glad my videos have been helpful! Good luck in the rest of your course!!
@muhammadyounasraza65732 ай бұрын
It's really Amazing to watch yours video, btw I have a question Here we have given that i= 6% comp per month then why we divide 0.06/12 = 0.5%, I mean that due to finding this we have two different "i" values, in question we are given 6% and we have also find another "i" value which is 0.5% ? I am bit of confused here.
@EngineeringEconomicsGuy2 ай бұрын
Great question. 6% is what we call the NOMINAL rate. Since the Nominal rate is quoted as "compounded monthly", that tells use we need to divide by 12 to get a monthly rate which is the true mathematical rate we use in the time value of money calculations...this is just how the financial world quotes interest rates. You just need to learn how to interpret the words. Please note, when we use a rate of 0.5% interest (i), we must use a value of N measured in months! Please search for my video explaining "Nominal and Effective Interest Rates".
@TonmoyMallick-l2k2 ай бұрын
Why lathe 3 is chosen over lathe 1 where both lathe have IRR greater than IRR MARR?
@EngineeringEconomicsGuy2 ай бұрын
The key is the amount of money invested. Lathe 1 only uses $100k, and lathe 3 uses $300k. If you buy lathe 1, what are you going to invest the unused $200k in?? We assume you will invest it in a project that earns the MARR. So, its better to invest all $300k in lathe 3...this gives a better return than $100k in lathe 1 and $200k in 'something else' that just earns the MARR. Watch the video again starting at around time 10:00... hopefully, that helps!
@JulioDeLaRosaOrtiz2 ай бұрын
I love how u just taught me what my professor couldn't in 5 minutes, Thank u soo much !!!!!!
@EngineeringEconomicsGuy2 ай бұрын
You are so welcome!
@anant32792 ай бұрын
amazing I never knew econmics subject is such beautiful
@EngineeringEconomicsGuy2 ай бұрын
Thank you very much for the nice comment!
@ocengilbert1222 ай бұрын
I don't not get the division of the interest by 12
@EngineeringEconomicsGuy2 ай бұрын
Very reasonable to not understand that! The explanation has its own video! Watch my video on Nominal and Effective interest rates. How interest rates are quoted follow rules that you just need to learn!
@ocengilbert1222 ай бұрын
@@EngineeringEconomicsGuy Where can I get those videos please
@EngineeringEconomicsGuy2 ай бұрын
Start with this video: kzbin.info/www/bejne/l4WUn5KYl7aEmK8 Then I invite you to explore my video playlist titled: "Interest". kzbin.info/aero/PLcfz9wmNxKqjTG5dsXDnIyUT8mCtA44Wu You will need to understand how to manipulate nominal and effective interest rates before you can move on with more time-value-of-money calculations. Good luck!
@kevvythepanda2 ай бұрын
Kind of dumb question but just to clarify, the coupon rate is NOT used in any of the TVM calculations, because it's a fixed rate on a fixed value (the face value), whereas the interest of 15% (in this video's example) is considered a TVM interest because it compounds, right?
@EngineeringEconomicsGuy2 ай бұрын
You are 100% correct!
@yasseredza56203 ай бұрын
Thank you so much❤ this is the best tutorial I found for this topic.❤
@EngineeringEconomicsGuy3 ай бұрын
Glad it was helpful!
@liuuu5343 ай бұрын
Thank you so much 😊
@EngineeringEconomicsGuy3 ай бұрын
You're welcome 😊
@unknown-td4zy3 ай бұрын
dont you think you should also tell when should be using nominal interest rate and effective interest rate..
@EngineeringEconomicsGuy3 ай бұрын
It is a good idea to clarify this point - thanks. Always use the effective interest rate that matches the frequency of the payments in calculations. ..meaning, if your problem has monthly payments you must use the effective monthly interest rate. The nominal rate is usually the information you are given in the problem, but this needs to be converted to the effective rate before doing the calculations. I hope this helps! Please explore some of my other videos to familiarize yourself with the procedure.
@seanburton52983 ай бұрын
It would be interesting to do this with a homesteading.
@EngineeringEconomicsGuy3 ай бұрын
I'm glad you're thinking about the method!
@ymonpaulo3 ай бұрын
Are you really writing backwards? 🤔
@EngineeringEconomicsGuy3 ай бұрын
Ha! No, I'm using software to horizontally flip the video.
@seanburton52983 ай бұрын
What if you are not given G?
@EngineeringEconomicsGuy3 ай бұрын
This would be a different type of problem. If the "shape" of the cash flow diagram is the same as this example but with an unknown 'G', then you can still create a 'time-value-of-money' equation that is of the same form as this example. To solve for the unknown G you would need to be given the value of P.
@kfoxx33 ай бұрын
It is absolutely pathetic that we have to resort to youtube for a college education. Thank you so much for doing this.
@EngineeringEconomicsGuy3 ай бұрын
You're so welcome! Good luck in your course.
@pruthvibarot76713 ай бұрын
hello sir thank you so much for such a informative and easy to understand video. i have one question that how to solve this equation = 1500(F/a,1.5075%, 8) , by solving [(1-i)^n - 1]/i , i am getting 1036.07 answer and afTER THAT i am not getting the 12652.61 answer can you please explain how to calculate it ? thank you
@pruthvibarot76713 ай бұрын
i got it sir . please don't waste your time explaining this . thank you
@EngineeringEconomicsGuy3 ай бұрын
OK - thanks! Good luck in your course!
@hydrodinky56313 ай бұрын
What is the total cashflow from year 1,4 and 7?
@EngineeringEconomicsGuy3 ай бұрын
I think what you are asking is better described as the "net" cashflow for a given time period. For year 4 the net cash flow is a down arrow of -$7500 (-5000-2500). For year 7, the net cash flow is a down arrow of $500 (+2000-2500). For year 1, the net cash flow is just a down arrow of -$2500. The purchase that occurs at time t=0 is NOT a year 1 cash flow. For time value of money calculations (i.e. when you start calculating compound interest), you will treat all down arrows as negative cash flows and up arrows as positive cash flows. I hope this helps!
@raedjaber67944 ай бұрын
You are more than amazing, sir. Thank you very much!