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The key takeaways are uniform series, shifted uniform series, randomly placed single amounts, and calculating equivalent annual series for shifted gradients.
Fundamentals of Engineering Economy Prepared by Mazyar Ghadirinejad
Chapter 3
3.1.
Calculations for Uniform Series That Are Shifted
The present worth is always located one period prior to the first uniform series amount
when using the P/A factor. The future worth is always located in the same period as the last uniform series amount when using the F/A factor.
Example 3.1
The offshore design group at Bechtel just purchased upgraded CAD software for $5000 now and annual payments of $500 per year for 6 years starting 3 years from now for
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Fundamentals of Engineering Economy Prepared by Mazyar Ghadirinejad
annual upgrades. What is the present worth in year 0 of the payments if the interest rate is 8% per year?
Solution Example 3.2
Recalibration of sensitive measuring devices costs $8000 per year. If the machine will be recalibrated for each of 6 years starting 3 years after purchase, calculate the 8-year equivalent uniform series at 16% per year.
Solution
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Fundamentals of Engineering Economy Prepared by Mazyar Ghadirinejad
Another solution:
3.2.
Calculations Involving Uniform Series and Randomly Placed Single Amounts
Example 3.3
An engineering company in Wyoming that owns 50 hectares of valuable land has decided to lease the mineral rights to a mining company. The primary objective is to obtain long-
term income to fi
nance ongoing projects 6 and 16 years from the present time. The engineering company makes a proposal to the mining company that it pay $20,000 per year for 20 years beginning 1 year from now, plus $10,000 six years from now and $15,000 sixteen years from now. If the mining company wants to pay off its lease immediately, how much should it pay now if the investment is to make 16% per year?
Solution
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Fundamentals of Engineering Economy Prepared by Mazyar Ghadirinejad
Example 3.4
A design-build-operate engineering company in Texas that owns a sizable amount of land plans to lease the drilling rights (oil and gas only) to a mining and exploration company. The contract calls for the mining company to pay $20,000 per year for 20 years beginning 3 years from now (i.e., beginning at the end of year 3 and continuing through year 22) plus $10,000 six years from now and $15,000 sixteen years from now. Utilize engineering economy relations
to determine the fi
ve equivalent values listed below at 16% per year. 1. Total present worth P
T
in year 0. 2. Future worth F in year 22. 3. Annual series over all 22 years.
4. Annual series over the first 10
years. 5. Annual series over the last 12 years.
Solution
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