Engineering Economics - Reference Handbook

Sep 19, 2026

Uploaded by Fez

Engineering Economics reference handbook compiling core time-value-of-money conversion factors and symbol definitions used in capital investment evaluation. Includes present worth, future worth, and capital recovery relationships for single payments and uniform series, plus uniform gradient variants. Covers depreciation methods and book value, capitalized costs, bond value and yield, rate-of-return concepts, break-even analysis, payback period, inflation-adjusted present worth, and benefit-cost criteria. Also provides modified ACRS factor tables and example factor tables for specific interest rates.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages7

Reading Time18 min

AccessFree to download

Factor conversions

Single payment and uniform series factors

Uniform gradient and modified factors

Nomenclature and definitions

Symbols and subscripts

Depreciation and capitalized costs

Straight-line and ACRS

Investment evaluation methods

Bonds, rate of return, break-even, payback

Inflation and benefit-cost analysis

Reference tables

Modified ACRS factors

Factor tables for a fixed interest rate

ENGINEERING ECONOMICS | Factor Name | Converts | Symbol | Formula | | --- | --- | --- | --- | | Single Payment Compound Amount | to F given P | (F/P, i%, n) | (1 + i)n | | Single Payment Present Worth | to P given F | (P/F, i%, n) | (1 + i) ñn | | Uniform Series Sinking Fund | toA given F | (A/F, i%, n) | i
(1 + i)n − 1 | | Capital Recovery | toA given P | (A/P, i%, n) | i (1 + i)n
(1 + i)n − 1 | | Uniform Series Compound Amount | to F given A | (F/A, i%, n) | (1 + i)n − 1
i | | Uniform Series Present Worth | to P given A | (P/A, i%, n) | (1 + i)n − 1
i (1 + i)n | | Uniform Gradient ** Present Worth | to P given G | (P/G, i%, n) | (1 + i)n − 1 n
−
i 2 (1 + i)n i (1 + i)n | | Uniform Gradient Ü Future Worth | to F given G | (F/G, i%, n) | (1+ i)n −1 n
−
i 2 i | |
Uniform Gradient á Uniform Series
| toA given G | (A/G, i%, n) | 1 n
−
i (1 + i)n − 1 | NOMENCLATURE AND DEFINITIONS A .......... Uniform amount per interest period B Benefit BV Book Value C Cost d .......... Combined interest rate per interest period Dj......... Depreciation in year j F Future worth, value, or amount f ........... General inflation rate per interest period G ......... Uniform gradient amount per interest period i ........... Interest rate per interest period ie Annual effective interest rate m ......... Number of compounding periods per yearn .......... Number of compounding periods; or the expected life of an asset P Present worth, value, or amount r Nominal annual interest rate Sn ......... Expected salvage value in year n Subscripts [j](j ........... at)[ ........... at](j ........... at) time j [n](n .......... at)[ .......... at](n .......... at) time n ** ........ P/G = (F/G)/(F/P) = (P/A) × (A/G) Ü .......... F/G = (F/A ñ n)/i = (F/A) × (A/G)á .......... A/G = [1 ñ n(A/F)]/i NON-ANNUAL COMPOUNDING i = 􀀆􀀄 1 + r 􀀃􀀁 m − 1 e 􀀅 m 􀀂 Discount Factors for Continuous Compounding (n is the number of years)(F/P, r%, n) = er n (P/F, r%, n) = eñr n (A/F, r%, n) = ~~ ~~eerrn~~ ~~11 (F/A, r%, n) = ~~ ~~eerrn~~ ~~11 (A/P, r%, n) = ~~ ~~1r~~ ~~n~~ ~~ (P/A, r%, n) = ~~ ~~1r~~ ~~n~~ ~~ BOOK VALUE BV = initial cost ñ Σ Dj ENGINEERING ECONOMICS (continued) DEPRECIATION Straight Line Dj = ~~ ~~C~~ ~~Sn Accelerated Cost Recovery System (ACRS) Dj = (factor) C A table of modified factors is provided below. CAPITALIZED COSTS Capitalized costs are present worth values using an assumed perpetual period of time. Capitalized Costs = P = Ai BONDS Bond Value equals the present worth of the payments the purchaser (or holder of the bond) receives during the life of the bond at some interest rate i. Bond Yield equals the computed interest rate of the bond value when compared with the bond cost. RATE-OF-RETURN The minimum acceptable rate-of-return is that interest rate that one is willing to accept, or the rate one desires to earn on investments. The rate-of-return on an investment is the interest rate that makes the benefits and costs equal. BREAK-EVEN ANALYSIS By altering the value of any one of the variables in a situation, holding all of the other values constant, it is possible to find a value for that variable that makes the two alternatives equally economical. This value is the breakeven point. Break-even analysis is used to describe the percentage of capacity of operation for a manufacturing plant at which income will just cover expenses. The payback period is the period of time required for the profit or other benefits of an investment to equal the cost of the investment. INFLATION To account for inflation, the dollars are deflated by the general inflation rate per interest period f, and then they are shifted over the time scale using the interest rate per interest period i. Use a combined interest rate per interest period d for computing present worth values P and Net P. The formula for d is d = i +f + (i × f) BEN

FAQs

What do the factor symbols like (F/P), (P/F), (A/P), and (P/A) represent?

They represent conversion factors between future worth, present worth, and uniform series amounts given an interest rate per period and number of periods.

How are depreciation and book value related in the handbook?

Book value is expressed as initial cost minus the accumulated depreciation Dj across years. Depreciation methods listed include straight-line and accelerated cost recovery (ACRS).

How does the handbook address inflation in present worth calculations?

It deflates dollars by the general inflation rate per interest period f, then shifts them over the time scale using the interest rate per interest period i, and uses a combined interest rate per period d for computing present worth values P and Net P.

Sep 19, 2026

Uploaded by Fez

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