Engineering Economics Blog

Today, Julie borrowed $5000 to purchase furniture for her new house. She can repay the loan in either of the two ways described below. Determine the engineering economy symbols and their value for each option.

 (a)    Five equal annual installments with interest based on 5% per year. 
 (b)    One payment 3 years from now with interest based on 7% per year.  

  Solution 

 (a)    The repayment schedule requires an equivalent annual amount   A , which is unknown.



 (b)    Repayment requires a single future amount F, which is unknown.