ABSTRACT
The process of economic analysis has the following basic components. The specific components will differ depending on the nature and prevailing circumstances of a project. This list is, however, representative of what an analyst might expect to encounter:
1. Problem identification 2. Problem definition 3. Development of metrics and parameters 4. Search for alternate solutions 5. Selection of the preferred solutions 6. Implementation of the selected solution 7. Monitoring and sustaining the project
Interest rates are used to quantify the time value of money, which may be defined as the value of capital committed to a project or business over a period of time. Interest
paid
is the cost on borrowed money, and interest
earned
is the benefit on saved or invested money. Interest rates can be calculated as simple rates or compound rates.
