Engineering Fundamentals: An Introduction to Engineering, 4th ed.c

Alternative A:

or

Alternative B:

or

20.10 Excel Financial Functions

You also can use Excel Financial Functions to solve engineering economic problems. Examples

of Excel’s Financial Functions and how they may be used are given in Table 20.11. Please pay

close attention to the terminology used by Excel, and the sign of variables, while following the

solutions to the example problems.

Example 20.11 A bank charges you, the credit card holder, 13.24% compounding monthly. Imagine that you have

accumulated debt in an amount of $4,000. Your credit card statement shows a minimum monthly

payment of $20.00. Assuming you wise up and realize that you better pay off your debt before charg-

ing on your card again, how long would it take to pay off the debt completely if you were to make

the minimum payments? How long would it take if you were to make a monthly payment of $50.00?

This problem could be solved by trial and error for the value of n, using Equations (20.14) or

(20.15), or better yet, using Excel’s NPER function. This function returns the number of periods for

an investment, given the interest rate, the uniform series payments, and the present value are known.

For the minimum payments of $20.00, the =NPER(0.1324/12, -20, -4000)will

then return the value 106.19 months or 8.85 years.

For monthly payments of $50.00, the =NPER(0.1324/12, -50, -4000)will

return 57.66 months or 4.8 years.

The moral of the story is “try not to get into debt, but if you do, pay the debt as quickly

as possible!”

Finally, it is worth noting that you can take semester-long classes in engineering eco-

nomics. Some of you will eventually do so. You will learn more in depth about the principles

of money – time relationships, including rate-of-return analysis, benefit – cost ratio analysis,

general price inflation, bonds, depreciation methods, evaluation of alternatives on an after-tax

basis, and risk and uncertainty in engineering economics. For now, our intent has been to

PWFW 1 P /F, 8%, 10 2  1 245,146.81 21 0.46319349 2 113,550.40

PWAW 1 P /A, 8%, 10 2  1 16,922.35 21 6.71008140 2 113,550.40

PWFW 1 P /F, 8%, 10 2  1 256,595.46 21 0.46319349 2 118,853.34

PWAW 1 P /A, 8%, 10 2  1 17,712.65 21 6.71008140 2 118,853.32

20.10 Excel Financial Functions 675

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