ABSTRACT
This chapter offers a summary of the salient features of engineering economic analysis that will allow users to apply these concepts to thermal energy systems. The cash flow diagram is a useful tool for visualizing an engineering economics problem. The cash flow diagram is akin to a free-body diagram in statics or dynamics, or identifying a system boundary in thermodynamics. In most engineering economic analysis problems, the task is to determine how to transform all of the incomes and costs on a cash flow diagram to a single point in time. The interest factors developed are known as discrete interest factors since the interest compounding occurs over specific finite time periods. The chapter presents several examples that demonstrate how the discrete interest factors can be applied in various economic analyses. Using equation solving software is a convenient way to calculate interest factors, especially in an iterative problem.
