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Engineering Economy

  1. Feb 29, 2012 #1
    1. The problem statement, all variables and given/known data

    Standby Power for water utility pumps and other electrical devices is provided by diesel-powered generators. As an Alternative, the utility can use natural gas to power generators, but it will be a few years before the gas is available at remote sites. The utility estimates that by switching to gas, it will save $25,912 per year, starting 3 years from now. at an interest rate of 10% per year, determine the present worth in year 0 of the projected savings that will occur in years 3 through 10.



    2. Relevant equations

    P = F(1/(1+i)^n)

    3. The attempt at a solution

    Drew out the timeline, and have a arrow up at t = 3 with value 25,912. With the interest rate of 10% a year, does it go up in value or down? Also how do I even solve this problem, my professor is horrible, in the notes he gives you nothing relevent to the problems he assigns. I honestly am surprised that he even gets paid to teach.
     
  2. jcsd
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