In the previous chapter we learned the basic concepts of engineering economy
and their role in decision making. The cash flow is fundamental to every
economic study. Cash flows occur in many configurations and amounts—
isolated single values, series that are uniform, and series that increase or
decrease by constant amounts or constant percentages. This chapter develops
derivations for all the commonly used engineering economy factors that
take the time value of money into account.
The application of factors is illustrated using their mathematical forms and
a standard notation format. Spreadsheet functions are introduced in order to
rapidly work with cash flow series and to perform sensitivity analysis.
The case study focuses on the significant impacts that compound interest
and time make on the value and amount of money.
