1
Engineering Economics
The capital originally invested in a
transaction is called the principal (p).
At any time after the investment of the
principal, the sum of the principal and
the interest due is called the amount (F).
F=P+I
I =Prt
Exact interest fort days.
t
I= Pr 365
Ordinary interest for t days.
t
!=Pr 360
Simple discount:
I =Fdt
I= interest
F =amount due at the end
of time "t"
d =discount rate
P+l=F
P=F-1
P=F-Fdl
P
=F (1 - dl)
Bankers discount:
.
l
d
= 1-d
.