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Engineering Economics Simulations

A collection of interactive 3D visualizations and simulations to help you master concepts in engineering economics.

Interest and Time Value of Money - Theory & Concepts

Understanding simple and compound interest, cash flow diagrams, and the core concept of time value.

Time Value of Money (TVM) Explorer

Present Value (PV)1,000 $
Interest Rate (r)5 %
Years (t)10 yrs

Future Value (FV)

$1,628.89

$FV = PV \times (1 + r)^t$

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Annuities and Gradients - Theory & Concepts

Analysis of uniform series (annuities), deferred annuities, perpetuities, and arithmetic/geometric gradients.

Gradient Cash Flow Visualizer

Base Amount (A1)1,000 $
Gradient (G)500 $ / yr

Constant amount change per year

Years (n)10 yrs
Interest Rate (i)10 %

Analysis

Total Present Worth:$17,590
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Nominal and Effective Interest Rates - Theory & Concepts

Distinguishing between nominal and effective rates, and handling discrete vs. continuous compounding.

Nominal vs. Effective Rate Calculator

Nominal Annual Rate ($r$)12 %

Formulae

Discrete Compounding:
$i_{eff} = (1 + \frac{r}{m})^m - 1$

Continuous Compounding:
$i_{eff} = e^r - 1$

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Present Worth Analysis - Theory & Concepts

Evaluating alternatives using the Present Worth method, Least Common Multiple (LCM), and Capitalized Cost.

Present Worth Analysis Simulator

Total Present Worth (PW)

$3339.30
Project Justified (PW ≥ 0)
PW=−P+A(P/A,i,n)+S(P/F,i,n)PW = -P + A(P/A, i, n) + S(P/F, i, n)

Cumulative Present Worth over Time

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Inflation and Purchasing Power - Theory & Concepts

Understanding the effects of inflation, real vs actual dollars, and the Fisher Equation in engineering economic analysis.

Purchasing Power Erosion Simulator

Results

Initial Value:
$1,000
Final Power:
$553.68
Value Lost:
-$446
Erosion Formula:
Powern=P(1+f)nPower_n = \frac{P}{(1 + f)^n}
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Replacement Analysis - Theory & Concepts

Determining when an existing asset should be replaced by calculating Economic Service Life (ESL) and analyzing Defender vs Challenger.

Economic Service Life (ESL) Visualizer

Initial Cost ($P$)20,000 $
Base Annual Operating Cost2,000 $
AOC Annual Increase Gradient1,000 $ / yr
Market Value Deprec. Rate20 %
Interest Rate (MARR)10 %
Economic Service Life (ESL)3 YearsMinimum EUAC: $7,885 / yr
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Benefit-Cost Ratio and Payback Period - Theory & Concepts

Public sector project analysis using B/C ratio and Payback Period methods.

Payback Period Analyzer

Cash Flows

Yr 0
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Payback Period:3.20 Years
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Break-Even and Sensitivity Analysis - Theory & Concepts

Decision making under uncertainty using Break-Even (linear and non-linear) and Sensitivity analysis.

Interactive Break-Even Analysis

$10k$100k
$50,000
$5$50
$20
$10$100
$45

Break-Even Point (Units)

2,000

Break-Even Revenue

$90,000

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After-Tax Economic Analysis - Theory & Concepts

Performing economic evaluations considering the impact of corporate taxes, effective tax rates, and After-Tax Cash Flow (ATCF).

After-Tax Cash Flow Visualizer

Gross Annual Income50,000 $
Operating Expenses15,000 $
Annual Depreciation10,000 $
Corporate Tax Rate21 %

Tax Shield Analysis

BTCF:$35,000
Taxes Paid:-$5,250
Final ATCF:$29,750
The Depreciation ShieldBy claiming $10,000 in non-cash depreciation, the company reduced its tax bill by $2,100.
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Capital Budgeting and Rationing - Theory & Concepts

Selecting a portfolio of independent projects under a strict capital constraint.

Capital Rationing Simulator

Independent Projects

Optimal Feasible Bundle

Project B+Project C
Total PW Max.
$10,000
Total Cost
$45,000
Budget: $50,000

Project Selection (Cost vs PW)

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Selected Cost
Selected PW
Rejected