Geometric Gradient - Engineering Economics Lightboard

[@AtmosWarrior]

Thanks! This is exactly the clear and concise explanation I needed to be able to complete my assignment. Best video on this topic on KZbin!

[@EngineeringEconomicsGuy]

Awesome comment! Thanks!

[@AbhishekJain-bv6vv]

Best online content on Engineering economics. Thanks a lot for this great content.

[@EngineeringEconomicsGuy]

You're very welcome!

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[@LeenaBou]

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[@TheCamillejr]

Just the man i was looking for! Thank you for your services!

[@stevenm3914]

You just saved my skin and I can never repay you but hope my share is payment enough.

[@EngineeringEconomicsGuy]

Thank you Steven! I loved your comment.

[@dogansahutoglu2073]

Thanks alot, very helpful lecture. Hope I will be successful in my economics exam...Also, you are using the below reference material which is prescribed for my exam. Engineering Economics Financial Decision Making for Engineers Canadian 5th Edition Fraser and Jewkes

[@EngineeringEconomicsGuy]

Good luck! I hope the videos help.

[@degaganuru6948]

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[@EngineeringEconomicsGuy]

I'm glad you found me!

[@taxfree4603]

Any videos on shifted series?

[@EngineeringEconomicsGuy]

I have a few videos in my 'Cash Flow Analysis' PLAYLIST that you might find helpful. I don't have a specific video on 'shifted' series, but perhaps this video will help: kzbin.info/www/bejne/pILYhp16qs6fd9k In general, if a series is 'shifted' you need to identify the appropriate cash flow 'pattern', use the most appropriate compound interest factor (say for an Annuity), then use the P/F or F/P compound interest factor to 'move' the final value to its proper point in time. Hope this helps.

[@taxfree4603]

@@EngineeringEconomicsGuy Thanks

[@n_d_a_y_i]

Can g and I have the same value? To be more specific, a problem where an amount grows by a prevailing interest rate(given I only). Is this an arithmetic or geometric?

[@EngineeringEconomicsGuy]

Yes, 'g' and 'i' can have the same value. Just make sure you understand that 'g' is the growth of the dollar amounts of the payments and 'i' is the interest rate. These are two different things. 'g' is what makes a series of payments a 'geometric' series. An 'arithmetic' series is one that increases by a constant dollar 'amount' (not a percentage). Spend some time thinking about the difference. Hope this helps.

[@hennachung80]

If the gradient is negative, do we still calculate the same way ?

[@EngineeringEconomicsGuy]

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.

[@osamuyiuwadia7480]

What about when the interest rate and the growth rate do not equal each other?

[@EngineeringEconomicsGuy]

The example problem in the second half of this video, solves a question with an interest rate that is different from the growth rate. Just watch the entire video any you should have your question answered.

[@yaqoobqp]

why did you use -1 for the example?

[@EngineeringEconomicsGuy]

I think you are asking about the -1 in the formula when I calculate i*. This is just algebra. Notice on the left side of the screen: (1+i*) = (1+g)/(1+i). Solve for i* by subtracting 1 from (1+g)/(1+i).

[@EngineeringEconomicsGuy]

Correction: The ratio is (1+i)/(1+g)...I wrote it incorrectly in my reply above.

[@9LimaAlpha7]

this is too complicated, i didnt get it

[@EngineeringEconomicsGuy]

I hear you! This is one of the more complicated concepts in Engineering Economics; and this is one of my longest videos! I suggest you visit my main Channel page and watch some of the videos that lead-up to this one. Make sure you're familiar with Annuities and the compound interest-factor-notation (i.e. (P/A, i, N), etc.). You could also try my video on Arithmetic Gradient as a warm-up; then come back to this video. Let me know how it goes!