ECOR 3800 Lecture Notes - Lecture 4: Cash Flow, Savings Account, Interest Rate
23 Jun 2019
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Document Summary
Engineering projects generally have economic consequences that occur over an extended period of time. For example, if an expensive piece of machinery is installed in a plant were brought on credit, the simple process of paying for it may take several years. The resulting favorable consequences may last as long as the equipment performs its useful function each project is described as cash receipts or disbursements (expenses) at different points in time. First cost: expense to build or to buy and install. Operations and maintenance (o&m): annual expense, such as electricity, labor, and minor repairs. Salvage value: receipt at project termination for sale or transfer of the equipment (can be a salvage cost) Revenues: annual receipts due to sale of products or services. Overhaul: major capital expenditure that occurs during the asset"s life. Cfd illustrates the size, sign, and timing of individual cash flows, and forms the basis for engineering economic analysis. A cfd is created by first drawing a.
