1. Basic Engineering Economics
Freshman Engineering Clinic II

2. Course Reminders & Deadlines
PathFinder
Engineering Economic Evaluation “Before” Questions due by Wednesday March 29th at 10:30 am
3D Game Lab
last deadline of 1,050 XP midnight Fri. April 14th
To get an “A” or 100% in GameLab you need to reach 1,250 XP but no penalty after reaching 1,050 XP

3. Review of Last Class – Key Concepts
Intellectual Property
Two main categories:
Industrial Property (Patents, Designs, Trademarks, etc.)
Copyrights
Need to file patent before public disclosure
New process grants patents on a “first to file” basis

4. Example Problem1 Answer the following:
What is the date the patent was issued?
Jan. 9th, 2001
What is the date the patent was filed?
Nov. 12th, 1999
Who is the inventor?
Maurice Bolle, Oyonnax
What is the patent for?
Ornamental design for eyeglasses
When does the patent expire?
Jan. 8th, 2015
1. Definition of a Design Patent? Accessed from on March 17th, 2017

5. Financial Basics When investing in a venture we want to know:
When will we get a return on investment (years)?
What is the cost of our capital or what return will we get on our investment (ROI)?
We can determine this through the following equation:
PV = FV/(1+i)n
PV = Present Value; FV = Future Value
i = interest rate (assumed to be compounded annually)
n = number of years of investment

6. Example
A return of $15000 (FV) is promised in 5 years (n) if you invest $10,000 at 6.5%(i)
PV = $15,000/( )5 = $10,948
Although $15,000 seems like a good return the amount of time it takes to reach it, makes the return very modest
Net Present Value (NPV) = $10,948 - $10,000 = $948 more than you originally supplied in today’s dollars
Doing the same calculation with n = 2 years
PV = $15,000/( )2 = $13,225
This is a much better return with a NPV of $13, $10,000 = $3,225

7. Now it’s your turn….
It is actually possible in some situations to have a negative NPV if it takes too long to get your return
Utilizing the scenario supplied in the last example determine at what value of n you will see a negative NPV.
Answer = 6.5 years

8. What if you borrowed money and did monthly payments?
A= P*[(i(1 + i)n)/((1 + i)n – 1)]
A = monthly payment
P = principal amount
i = monthly interest rate
n = number of months

9. Interest Rate and Interest Charges on Loans
i = monthly interest = APR/12 [i = for an APR of 6.5%]
Example: Car loan ($25000, 48 months, 6.5% interest);
A = $593;

10. Deciding on the Best Car Loan
You are purchasing a Chrysler 200 that has a sales price of $22,990 (you are financing the whole car)
Using the provided Car Loan Shopping Sheet, determine 5 different car loan options if you want a 60 month loan
Ensure that you look at a bank, credit
union and private money lender as
potential lenders
Determine what the best loan would be
and provide a rationale as to why