Thanks a lot for the great videos! For calculating EAC_repair, one could also use the arithmetic gradient and directly convert the cash flow for repairs for the 3-year ownership scenario to an annuity. That would be EAC_repair = 100 * (A/G, 5%, 3) = 100 * 0.9675 = $ 96.75 This is just a lucky coincidence, but it matches the calculations in the video.
Good question and a common error. Draw a cash flow diagram. Remember to start counting years at the number zero! The A/F for 100 should have n=1, and the A/F for 200 should have n=2. I hope this helps!
@@EngineeringEconomicsGuy, yes, it does. Thank you. I think it is safer to move them all to PW, like you did, or some FW prior to applying either A/p or A/F. Sir, I owe everything to you as far as engineering economics is concerned. Thank you so much...
Good question. The present value is part of the so-called, capital recovery formula: (P-S)(A/P, i, n) + Si. This converts a P (purchase price) and an S (salvage value) into an equivalent A in one step.
Great question! The short answer is 'no', but if you're careful you could program the cells in a spreadsheet to replicate this analysis. Unfortunately, there is no one simple formula that can be used DIRECTLY for EAC. Excel does have built-in functions for A/P, P/F, etc. They are called PMT and PV - and there are other ones!
The answer is right at the beginning of this video: th-cam.com/video/21P7VCw1DwI/w-d-xo.html (A/P, i, n) = [ i * ((1+i)^n)] / [((1+i)^n) - 1] If you don't like using formulas, you can also use a compound interest table. These tables are usually in an Appendix of your textbook (or you can find them online). Find the table dedicated to the value of 'i' in your problem, then find the column for A/P and the row for the value of 'n'. Hope this helps.
Thanks a lot for the great videos! For calculating EAC_repair, one could also use the arithmetic gradient and directly convert the cash flow for repairs for the 3-year ownership scenario to an annuity. That would be
EAC_repair = 100 * (A/G, 5%, 3) = 100 * 0.9675 = $ 96.75
This is just a lucky coincidence, but it matches the calculations in the video.
Yes, absolutely! Great comment - thanks!
You are more than amazing, sir. Thank you very much!
So nice of you! Thanks!
When do we replace the defender? If there's is a challenger and defender
Excellent example! Thank you. I tried to use 100(A/F(5%,2)+200(A/F(5%,3), but it yielded 112 instead of the 96.75 for O&M at 3 years. Why?
Good question and a common error. Draw a cash flow diagram. Remember to start counting years at the number zero! The A/F for 100 should have n=1, and the A/F for 200 should have n=2. I hope this helps!
@@EngineeringEconomicsGuy, yes, it does. Thank you. I think it is safer to move them all to PW, like you did, or some FW prior to applying either A/p or A/F. Sir, I owe everything to you as far as engineering economics is concerned. Thank you so much...
Thank you for creating such quality content.
Glad you enjoyed it!
do u not first need to find the present value of the cashflows before doing A/P calculation?
Good question. The present value is part of the so-called, capital recovery formula: (P-S)(A/P, i, n) + Si. This converts a P (purchase price) and an S (salvage value) into an equivalent A in one step.
Is there a way to compute those calculations using excel, or any other software?
Great question! The short answer is 'no', but if you're careful you could program the cells in a spreadsheet to replicate this analysis. Unfortunately, there is no one simple formula that can be used DIRECTLY for EAC. Excel does have built-in functions for A/P, P/F, etc. They are called PMT and PV - and there are other ones!
@@EngineeringEconomicsGuy Thank you. Your videos are very clear.
Thanks! I'm glad you like the videos!
Can anyone tell me how to find the value of this Equation (A/p,10%,3)?.
The answer is right at the beginning of this video:
th-cam.com/video/21P7VCw1DwI/w-d-xo.html
(A/P, i, n) = [ i * ((1+i)^n)] / [((1+i)^n) - 1]
If you don't like using formulas, you can also use a compound interest table. These tables are usually in an Appendix of your textbook (or you can find them online). Find the table dedicated to the value of 'i' in your problem, then find the column for A/P and the row for the value of 'n'.
Hope this helps.
I watched all your videos. they are so usuful. by the way you look great after your weight loss.
Where's the accompanying video?
In the playlist you should see another video titled "Equivalent Annual Cost Example 2" .