1. Lecture 4 Engineering Economics ENGR 3300 Department of Mechanical Engineering Inter American University of Puerto Rico Bayamon Campus Dr. Omar E. Meza Castillo omeza@bayamon.inter.edu http://www.facultad/bayamon.inter.edu/omeza

2. Lecture 4 Nominal and Effective Interest Rate What it really means?

3. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón

4. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón Understanding Money Management

5. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón Nominal Versus Effective Interest Rates

6. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón 18% APR Compounded Monthly

7. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón 18% APR Compounded Monthly

8. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón Effective Annual Interest Rate

9. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón What It Really Means

10. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón Practice Problem 1  If your credit card charges the interest based on 12.5% APR, what is your monthly interest rate and annual effective interest rate, respectively?  Your current outstanding balance is $2,000 and you skip payments for 2 months. What would be the total balance 2 months from now?

11. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón

12. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón Practice Problem 2  Suppose your savings account pays 9% interest compounded quarterly. If you deposit $10,000 for one year, how much would you have?

13. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón

14. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón Effective Annual Interest Rates (9% compounded quarterly)

15. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón Nominal and Effective Interest rates with Different Compounding periods

16. Lecture 4 ENGR 3300 Engineering Economics Inter - Bayamón Homework 2  www.bc.inter.edu/facultad/omezawww.bc.inter.edu/facultad/omeza