Drawing Cash Flow Diagrams - Engineering Economics Lightboard
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- Опубликовано: 6 сен 2024
- Engineering Economics, Drawing cash flow diagrams; compounding periods; time value of money calculations; financial model; positive and negative cash flows; annuities
Your videos are literally saving my life, I have an exam within the next few months in Engineering Economics that I am forced to take despite being from a different academic background (otherwise I would lose my scholarship!), so I am studying by myself completely for this topic from scratch. The book decided for the exam is called: Fundamentals of Eng Economics by Chan.S.Park. and I having trouble matching exam topic requirements with the chapters of this book (since its impossible for me to finish it in 8 weeks) . What is required in the exam description from that book is the following:
Time value of money, cash flows, and economic equivalence
Interest rate, yields, compounding
Inflation and its impact on project cash flows
Budget and cost estimation
Systems approach to projects
Work breakdown structure
System life cycle
Criteria for project selection
so if you could help me in locating which chapters I should focus on it would be great, because I am not familiar with the topic nor with the content of the book. That is if you know the text book mentioned above of course. Thanks so much anyway!!!!
Thanks! I'm glad you like the videos. I'm not familiar with that textbook but if you can send me a few images of the Table of Contents then perhaps I can suggest the Chapters that match the exams-topic-list. eeconomicsguy@gmail.com
@@EngineeringEconomicsGuy thank you so much, I just sent an email to you.
Thank you so much Sir! A well presented beautiful explanation from scratch :) I will be continuing your other videos in the playlist. Glad I found this channel.
Great to hear! I'm glad you like my content!
You are the saviour
Thanks!
sir for your next video could you increase the sound of your videos
Ok. Thanks for the feedback. I'll see what I can do!
Masha Allah keep it up sir
Thank you for watching my videos! I hope they help you.
I like it your all vedio prof. what about economic treader.
Pls do you have videos on repeatability assumption and co-termination?
Try this video on repeated cash flows for present worth comparisons: ruclips.net/video/WEGZzry21Jo/видео.html
You should also explore the videos in my Cash Flow Analysis Playlist.
Hope this helps!
@@EngineeringEconomicsGuy Thank you very much sir!
I have an assignment question that has compounding interest regarding a loan needed to build a project. How can I incorporate compounding interest in my cash flow? Is it also possible if you could give me some guidance on how to tackle this task in my assignment?
I have other videos dealing with compound interest problems. These videos will probably help you. Go to my main RUclips Channel and look under the 'Interest' playlist.
If you have a question with a maintenance cost (outflow ) which occurs every one and half years,how will you represent it on the cashflow diagram ?
Excellent question. It depends on how often the interest is compounded. I suspect your problem has an interest-rate that is compounded monthly... In this case, you should construct the cash flow diagram using half year (6-month) time increments. You then need to calculate an effective-6-month interest rate by compounding the monthly interest 6x. If you're lucky, the problem might have been presented with a 6-month compounding period - in this case you just use the 6-month rate directly. For instance, if the problem says the interest rate is 10% compounded semi-annually you would use an interest rate of 5% for each 6-month time period. IF the interest rate is 10% compounded monthly, you would take 10%/12 = 0.8333% per month, then compound it for 6 months, i.e. (1+0.008333)^6 -1 = 5.10533%. In the strange case that the problem was presented as 10% compounded yearly...then you would draw the cash flow diagram with yearly time increments and then 'push' each 1.5-year payment to the end of the year in which it occurred. You would end up with a cash flow at the end of yr2, yr3, yr5, yr6, yr8, yr9, etc. ...but this is pretty weird. It is much more likely that your problem as an interest rate that is compounded monthly or semi-annually. Hope this helps!
This video might help: ruclips.net/video/kEcGEXlK5oY/видео.html
And, this one: ruclips.net/video/plotBZ-kvpc/видео.html
@@EngineeringEconomicsGuy please can I send the question so that you can get an in-depth knowledge of what the question requires me to do
Texaco and SaudiAramco,an oil producing companies signs a Memorandum of Understanding (MoU).The MoU is estimated to last for 12years. Annualy, the two companies benefits $1001.00 after driling machine and it is scheduled to undergo maintenance every one and half years at a cost of $1010.00. If the initial price of the machine cost is $6000;
a.How much does the company makes on the last year if the salvage value is$1011. b.Interpret your information on a cashflow diagram. c.How much does the company make before the end on the 6th year, justify with calculations.
OK - it looks like this is not a time-value-of-money question. It appears to be a 'drawing cash flow diagram' question. Some of the wording is ambiguous but I will take a crack at what is meant. I would draw a diagram with 12 years in yearly increments. Place an up arrow at the end of each year (i.e. at t=1, 2, 3, etc.) each with a value of +$1001. Draw a down arrow every 1.5 years (i.e. the first one would be half-way between '1' and '2'; the second one would be at '3'; etc.) each with a value of -$1010 - I'm not sure if you should draw a final down arrow at year '12' since it doesn't make sense to do maintenance if the equipment is just being sold for its salvage value (i.e. you will also have an up arrow of +$1011 due to the salvage value at time '12'). Important: There will also be a down arrow at t='0' for -$6000. Then you can move through time adding and subtracting as the cash flows occur. The wording "before the end of the 6th year" is a bit confusing - not sure if that means "at" t=6...maybe. Also, I'm not exactly sure what is meant by "How much does the company make on the last year..."? I think this means the 'net' cash flow in the last year. This might be +$1011 + $1001 - $1010 ? It might also be asking for the total cumulative amount over the 12 years...?
What is the total cashflow from year 1,4 and 7?
I think what you are asking is better described as the "net" cashflow for a given time period. For year 4 the net cash flow is a down arrow of -$7500 (-5000-2500). For year 7, the net cash flow is a down arrow of $500 (+2000-2500). For year 1, the net cash flow is just a down arrow of -$2500. The purchase that occurs at time t=0 is NOT a year 1 cash flow. For time value of money calculations (i.e. when you start calculating compound interest), you will treat all down arrows as negative cash flows and up arrows as positive cash flows. I hope this helps!
He's writing backwards
Sir can you help about the Cash flow diagram for our final exam i really need your help from philippines please
I can't help you DURING your exam! Sorry. But if you have questions about Cash Flow diagrams, you can watch the videos in my CASH FLOW ANALYSIS PLAYLIST: ruclips.net/p/PLcfz9wmNxKqgciRucJOr8VdEQQT_cicOT
You may find this helpful. Good luck on your exam.