Cost to Coast
A cost incurred in the past that is not used for future decision-making.
What is a sunk cost?
The direction of a profitable project's cash flows when brought to (Net) Present Worth, (Estimated Uniform) Annual Worth, or Future Worth.
What is up?
The Excel function used to calculate a series of recurring, equal payments resulting from present or future cash flows.
What is =PMT()?
The simple interest earned over a 5 year period at 5% APR interest, given a loan principal of $5,000.
What is $1,250?
According to traditional free-market economics, this is the point where the supply and demand curves intersect and results in maximal utility or profit.
What is the "market clearing point" or the "breakeven point"?
The homework, paid work, sleep, or recreation you would partake in if you weren't in this class right now.
What is opportunity cost?
The analysis period to compare mutually-exclusive alternative pumps if brass has a lifetime of 10 years and steel has a lifetime of 12 years, assuming repeatability.
What is 60 years?
Typed into Excel, this is the formula to solve for an interest rate given your annual payment is $300, the loan will be paid off in 17 years, and the present value of the loan is $3,750.
What is =RATE(17,-300,3750) ?
The compound interest earned over 5 years at a 5% APR interest rate, given a loan principal of $5,000.
What is $1,381.41?
From our microeconomic point of view, what is the breakeven number of units if our startup costs were $100,000, our per-unit costs are $1.00, and each unit can be sold for $6?
What is 20,000 units?
The term for costs incurred on a product or service from cradle to grave.
What is Life Cycle Cost?
The number of possible IRR's for a project with an initial negative cash flow followed by all positive cash flows.
What is 1?
The full Excel formula to solve for the IRR given an initial investment of $400,000 and an annual savings of $30,000 over a period of 15 years
What is =RATE(12,30000,-400000)?
The amount of money you'd need to have in a trust fund (which has an interest rate of 7%) today to provide you $50,000 each year for an indefinite period of time.
One example of an inelastic market and one of an elastic market.
What are (for example) insulin and shampoo?
The marginal cost of moving from 5 to 6 units of production, given the below table:
Units (Cost)
4 ($10)
5 ($13)
6 ($15)
What is $2?
A natural gas well is projected to produce $200,000 in profit during its first year of operation, $195,000 the second year, $190,000 the third year, and so on, continuing this pattern. If the well is expected to produce for a total of 10 years, and the effective annual interest rate is 5.0%, what is the PW?
What is $1,386,000?
How you would calculate the present worth of a series of cash flows that is $100 in year 1 and increases by $10 each year for 5 years, assuming a 2% interest rate, in compound interest factor terms (X/Y, i%, N).
What is PW = $100 * (P/A, 2%, 5) + $10*(P/G, 2%, 5)?
The effective interest rate on a loan that has an APR (nominal interest rate) of 15% and is compounded daily.
What is 16.18%?
The definition of economic utility, and one example.
What is "usefulness or benefit" gained from a decision? Examples include: fullness/energy gained from buying and eating food, certification/job gained from completing a college degree, etc.
The cost categories of: 1) the $500,000 spent on a warehouse, and 2) the $3.00 of aluminum you need to produce each unit.
What are fixed costs and variable costs, respectively?
The amount you'd need to deposit each month to become a millionaire in 20 years, at an annual interest rate of 12%.
What is $1,010.86?
In terms of compound interest factors (X/Y, i%, N), the formula to solve for the equivalent uniform monthly worth of a project with an annual, nominal interest rate of 6% compounded monthly, capital costs equal to $1,000,000, a salvage value of $200,000 at the end of 5 years, monthly expenses of $40,000 and monthly revenues of $250,000.
What is EUMW = -1,000,000*(A/P,0.5%,60) + 200,000*(A/F,0.5%,60) + 250,000 - 40,000 ?
The present worth of the following cash flows given 5% annual interest:
Cash Flow (Year)
-$100,000 (0)
$4,500 (1)
$90,000 (2)
-$5,000 (3)
What is -$18,400.82?
What is $6,768,200?