What is ‘Political Risk’
Political risk is the risk an investment's returns could suffer as a result of political changes or instability in a country. Instability affecting investment returns could stem from a change…
Defining Time Value of Money
It is a mechanics which involve the compound interest factors to express cash flows (payments) occurring at different times to a single equivalent payment. Let’s understand interest rates and its…
International Political Economy
International political economy studies problems that arise from or are affected by the interaction of international politics, international economics, and different social systems (e.g., capitalism and socialism) and societal groups…
Spreadsheets for economic analysis
In economic analysis spreadsheets may be helpful for a number of purposes: · Constructing tables of cash flows · Using annuity functions to calculate P, F, A, n, or i. · Using a…
Nominal and Effective Interest
An interest rate takes two forms: nominal interest rate and effective interest rate. The nominal interest rate does not take into account the compounding period. The effective interest rate does…
Arithmetic Gradient Series
Suppose that there is a series of "n" payments uniformly spaced but differing from one period to the next by a constant. The change or "gradient" from one period to…
Uniform annual series and future value
Suppose that there is a series of "n" uniform payments, uniform in amount and uniformly spaced, such as a payment every year. Let "A" be the amount of each uniform…
Interest and Equivalence
Simple interest, as opposed to compound interest, is rare. With an investment that pays simple interest, the amount of interest accumulated each period depends solely on the amount invested, not…
Making Economic Decisions
Selecting an appropriate criterion (or criteria) for selecting among competing alternatives is a critical step in engineering decision making. If a problem involves fixed input among the possible alternatives, then…
Engineering Costs and Cost Estimating
An engineering economic analysis may involve many types of costs. Here is a list of cost types, including definitions and examples. A fixed cost is constant, independent of the output…
