Scribd
Upload
16 views

Process Economics II Process Economics II Process Economics II Process Economics II

This document discusses concepts related to project economics and time value of money calculations. It covers topics like project cash flows, comparing investment alternatives, profitability analysis, time value of money, interest rates, and simple interest calculations. Simple interest is defined as interest calculated only on the principal amount without considering interest earned in previous periods. An example is provided to demonstrate calculating simple interest on a $1000 loan over 3 years at 5% annual interest.

Uploaded by

Zakariya Mohamed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
16 views

Process Economics II Process Economics II Process Economics II Process Economics II

This document discusses concepts related to project economics and time value of money calculations. It covers topics like project cash flows, comparing investment alternatives, profitability analysis, time value of money, interest rates, and simple interest calculations. Simple interest is defined as interest calculated only on the principal amount without considering interest earned in previous periods. An example is provided to demonstrate calculating simple interest on a $1000 loan over 3 years at 5% annual interest.

Uploaded by

Zakariya Mohamed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 1

Process economics II Process economics II Process economics II Process economics II

H82PLD - Plant Design Econ II - 2


Lecture outline Lecture outline Lecture outline Lecture outline
Time value of money
Project cash flow
Comparing alternatives
Project cash flow
Profitability analysis
H82PLD - Plant Design Econ II - 3
Time value of money Time value of money Time value of money Time value of money
Interest is the manifestation of the time value of money.
From the perspective of a saver, a lender, or an investor,
interest earned is over a specific period of time is know as
rate of return (ROR).
Interest period is the time unit for rate of return.
( ) % 100
amount original
unit per time accrued interest
% rate Interest =
( ) % 100
amount original
unit per time accrued interest
% return of Rate =
H82PLD - Plant Design Econ II - 4
Simple interest Simple interest Simple interest Simple interest
Simple interest is calculating using principle only,
ignorin any interest accrued in preceding interest
period.
Simple interest = (Principle)(Number of periods)(interest
rate)
Example:
A load of $1000 for 3 years at 5% per year simple interest.
How much is the value after 3 years.
Total Due = $1000 + $1000(3 yr)(0.05/yr) = $1150

You might also like