Difference between revisions of "Written midterm - 2012"
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The midterm will be on | The midterm will be on 29 October, 19:00 to 22:00. The topics covered will only be on Engineering Economics. | ||
It will be written in | It will be written in T29 room 101. | ||
Resources you will need: | Resources you will need: | ||
Revision as of 21:26, 12 October 2012
The midterm will be on 29 October, 19:00 to 22:00. The topics covered will only be on Engineering Economics.
It will be written in T29 room 101.
Resources you will need:
- A list of the basic CRA classes for depreciation (see the section on 21 September)
- Inflation factors for the process industries
Questions in the midterm will be related to these topics:
- Understand various definitions of “interest” and how each is calculated and used: simple, compound, nominal, and effective
- Know how to calculate cash flows and exchange them for equivalent values at different times.
- How do taxes affect the above?
- What if all cash flows are negative? (e.g., a public works project)
- Calculate values at any time period from the cash flow data if the interest rate is different for different periods.
- Be able to work forwards, i.e. escalate values to a future time point, or backwards, i.e. deflate all values to their present value
- Compare various methods of profitability mentioned in class
- What are the advantages and disadvantages of each method
- What similarities do the measurements have?
- At what point in the planning of a project would each measure be appropriate?
- What are the measurements trying to represent?
- What are some simple measures of profitability that one could quickly do to see if a project makes any sense?
- The calculation of DCFRR requires a trial and error solution. What is the most efficient way to accomplish this?
- What are typical critical values for Payback Time (PT), Return on Investment (ROI), Discounted Cash Flow (DCF), and Minimal Acceptable Rate of Return (MARR)?
- Find one more common measure of profitability (Ex. Equivalent Annual Worth or Annuity). How is it calculated and how does it compare to other measurements?
- Discuss how the “value of money” is determined.
- What factors affect cash flow? How are these factors calculated? e.g. inflation, depreciation, taxes
- Set up a cash flow problem and calculate measures of profitability.