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The Engineering Economic Equations Every Safety Professional Should Know

# The Engineering Economic Equations Every Safety Professional Should Know

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## The Engineering Economic Equations Every Safety Professional Should Know

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1. ### The Engineering Economic Equations Every Safety Professional Should Know

Presented By: Jarred O’Dell, ASP Safety Director Syracuse Utilities
2. Please Silence Cell Phones House Keeping
3. Please Silence Cell Phones Sign-in Sheet House Keeping
4. Please Silence Cell Phones Sign-in Sheet Sleeping during the presentation House Keeping
5. For those of you pursuing your CSP: 7 – 15 questions on the ASP Exam 7 – 15 questions on the CSP Exam For everyone else: Ever buy a car or a house? Who has a credit card? Why Engineering Economics
6. Engineering Economics 0-4
7. You do not need an app for that!!! Engineering Economics
8. Engineering Economics
9. Uff da is an expression of Norwegian origin adopted by Scandinavian-Americans. This exclamation is an announcement that, that person is going into a state of sensory overload. Uff Da!
10. If you find yourself going into sensory overload and need to ask a question say: Uff Da! Uff Da!
11. Uff Da!
12. Question: 1
13. A wealthy relative died and left you her estate. You can choose to either accept \$6,000,000 today or wait and receive \$10,000,000 in five years. Assume the annual interest rate over this period is 10%. You decide to… Engineering Economics: Q1
14. You decide to: Wait the 5 years B) Take the money and run Do nothing, its probably the same people that brought you the Nigerian Lottery Engineering Economics: Q1
15. Engineering Economics Page 1
16. Future Present Amount of periodic receipt/payment Number of years* Annual Interest* expressed in decimal form (e.g. 10% = .10) F = P = A = n = i = Engineering Economics Page 1
17. Engineering Economics Page 1
18. Engineering Economics
19. Engineering Economics
20. Engineering Economics
21. F = P = A = i = n = 10,000,000 6,000,000 N/A 10% or 0.10 5 years Engineering Economics: Q1 Page 2
22. F = P = 6,000,000 (1+ 0.10)5 10,000,000(1+0.10)-5 Engineering Economics: Q1 Page 2
23. Question: 2
24. You decided to go back to school and eared your Masters Degree in mathematics. Having heard this, your supervisor throws this scenario at you: Engineering Economics: Q2
25. The chief financial officer of Widget Inc. expects a 10% annual return on investments for all capital projects. What is the maximum cost that will be approved from a project that is expected to save \$8,000 per year over 10 years? Assume the project will be fully depreciated in the 10 years. Engineering Economics: Q2 Question 2
26. Uff Da!
27. F = P = A = i = n = N/A ??? \$8,000 10% or 0.10 10 years Engineering Economics: Q2 Page 3
28. Engineering Economics
29. Engineering Economics: Q3 Page 3
30. Question: 3
31. You recently obtained 6σ Black Belt status. Congratulations! Understandably, you are very anxious to test out your new skills. Soon you face this problem: Engineering Economics: Q3
32. The financial policy of Acme requires that capital investments must have an annual return of 12%. An engineering solution to a safety problem will cost \$250,000 for the initial installation, and it will cost \$12,000 annually to maintain for 15 years. What is the required annual savings from this project in order for it to be approved? Engineering Economics: Q3 Question 3
33. F = P = A = i = n = N/A \$250,000 ??? 12% or 0.12 10 years Engineering Economics: Q3 Page 4
34. Engineering Economics
35. A = Engineering Economics: Q3 Page 4
36. Question: 4
37. Having recently been conferred as a Doctor in Safety and Engineering Science, your are now ina position to poses this scenario to youremployer: Engineering Economics: Q4
38. Your company decided to hire an EHS/6σ, executive. If a balloon payment of \$10,000,000 is due in 10 years, what amount would management have to deposit monthly into a savings account (paying interest of 6% per year) to accumulate adequate funds to pay the note? Engineering Economics: Q4 Question 4
39. F = P = A = i = n = \$10,000,000 N/A ??? 6% or 0.06 10 years Engineering Economics: Q4 Page 5
40. Engineering Economics
41. A = Engineering Economics
42. Future Present Amount of periodic receipt/payment Number of years* Annual Interest* expressed in decimal form (e.g. 10% = .10) F = P = A = n = i = Engineering Economics Page 1
43. A = Engineering Economics
44. Question: 5
45. One of your faceless pawns is having trouble figuring out the following scenario. He humbly/fearfully asks for your help: Engineering Economics: Q4
46. Calculate the monetary value after ten years of a behavior based safety program that costs \$40,000 per year at the start. Assume an inflation rate of 4.3% Engineering Economics: Q5 Question 5
47. F = P = A = i = n = ??? N/A \$40,000 4.3% or 0.043 10 years Engineering Economics: Q4 Page 5
48. Engineering Economics
49. F = Engineering Economics: Q5
50. Uff Da!
51. Engineering Economics