2013 11 Engineering Economics

7/21/2019 2013 11 Engineering Economics

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The EngineeringEconomic Equations

Every Safety Professional

Should Know

Presented By: Jarred O’Dell, ASP

Safety DirectorSyracuse Utilities



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Why Engineering Economics

For those of you pursuing your CSP

! "# $uestions on the ASP %&a'

! "# $uestions on the CSP %&a'

For everyone else

%(er )uy a car or a house*+ho has a credit card*



Engineering Economics

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'uestion (



Engineering Economics '(

A /ealthy relati(e died and left you herestate0 ou can choose to either accept45,666,666 today or /ait and recei(e

4"6,666,666 in fi(e years0 Assu'e theannual interest rate o(er this period is"670 ou decide to8




ou decide to:

A9 +ait the # years

B9 B9 1a3e the 'oney and run

C9 Do nothing, its pro)a)ly the sa'e people

that )rought you the .igerian ottery




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;uture

Present

A'ount of periodic receipt<pay'ent

.u')er of years=

Annual 2nterest= e&pressed in deci'al

for' >e0g0 "67 ? 0"69

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n =

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"6,666,666

5,666,666

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"67 or 60"6

# years




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5,666,666 >"@ 60"69#

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'uestion )



Engineering Economics ')

ou decided to go )ac3 to school and earedyour asters Degree in 'athe'atics0a(ing heard this,

your super(isorthro/s thisscenario at you:




1he chief financial officer of +idget 2nc0e&pects a "67 annual return onin(est'ents for all capital proects0 +hat is

the 'a&i'u' cost that /ill )e appro(edfro' a proect that is e&pected to sa(e4,666 per year o(er "6 years* Assu'ethe proect /ill )e fully depreciated in the

"6 years0

'uestion )



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4,666

"67 or 60"6

"6 years



Engineering Economics '*

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'uestion *




ou recently o)tained 5E Blac3 Belt status0Congratulations Understanda)ly, you are(ery an&ious to test out your ne/ s3ills0

Soon you face this pro)le':




1he financial policy of Ac'e re$uires thatcapital in(est'ents 'ust ha(e an annualreturn of "F70 An engineering solution to

a safety pro)le' /ill cost 4F#6,666 for theinitial installation, and it /ill cost 4"F,666annually to 'aintain for "# years0 +hat isthe re$uired annual sa(ings fro' this

proect in order for it to )e appro(ed*

'uestion *




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4F#6,666

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"F7 or 60"F

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'uestion #



Engineering Economics '#

a(ing recently )een conferred as a Doctorin Safety and %ngineering Science,your are no/ in

a position to posesthis scenario to youre'ployer:




our co'pany decided to hire an %S<5E,e&ecuti(e0 2f a )alloon pay'ent of4"6,666,666 is due in "6 years, /hat

a'ount /ould 'anage'ent ha(e todeposit 'onthly into a sa(ings account>paying interest of 57 per year9 toaccu'ulate ade$uate funds to pay the

note*

'uestion #




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4"6,666,666

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57 or 6065

"6 years




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;uture

Present

A'ount of periodic receipt<pay'ent

.u')er of years=

Annual 2nterest= e&pressed in deci'al

for' >e0g0 "67 ? 0"69

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'uestion +




One of your facelesspa/ns is ha(ing

trou)le figuring outthe follo/ingscenario0 ehu')ly<fearfully

as3s for your help:



Engineering Economics '+

Calculate the 'onetary (alue after tenyears of a )eha(ior )ased safety progra'that costs 4G6,666 per year at the start0

Assu'e an inflation rate of G0H7

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4G6,666

G0H7 or 606GH

"6 years



Engineering Economics '+

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2013 11 Engineering Economics

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