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Tutorial 5
Tutorial 5
Concepts Review
Learning curve When we do the same task repetitively, we learn the task and become more ecient. Cost estimating relationship(CER) A CER is a mathematical model that describes the cost of an engineering project as a function of one or more design variables. Linear regression To nd the line such that the sum of the distance between the data points and the line is the smallest among all the lines.
Concepts Review
Money-time relationships Time value of money since it has interest. The total interest is linear proportional to the amount of loan, the interest rate and the number of interest periods. Cash-ow diagrams To evaluate the cash-ow over several periods at a certain time point. Interest formulas P (F /P , i %, N ), F (P /F , i %, N ), A(F /A, i %, N ) F (A/F , i %, N ), A(P /A, i %, N ), P (A/P , i %, N ) Deferred annuities
We have known that the relationship between the cost of producing a kind of food and the weight of output as follows:C = a0 v a1 , a0 > 0. Please use the following data to estimate a0 , a1 via linear regression. C(dollar) v(kg) 0.8944 0.2 1.0954 0.3 1.2649 0.4 1.4142 0.5 1.5492 0.6
Solution of Example1
STEP1: Take logarithm on both sides, log C = log a0 + a1 log v . STEP2:Set y = log C and x = log v , y = log a0 + a1 x . STEP3:Take logarithm on initial data. y=logC x=logv -0.1116 -1.6094 0.0911 -1.2040 0.2350 -0.9163 0.3466 -0.6931 0.4377 -0.5108
5 i =1 xi 5 i =1 xi 5 i =1 xi
5 i =1 yi 2
= 0.5
5 log a0 = SETP5: a0 = 2,
5 2 i =1 xi 5 i =1 yi
a1 5
= 0.6931
a1 = 0.5.
Tutorial 5 of SEEM2440 A/B
Example2:Cash-ow diagrams
In the accompanying diagram, what is the value of K on the top cash-ow diagram that is equivalent to the bottom cash-ow diagram? Let i = 12% per year. K K
6 6
2 100
6
3 210
6
4 320
6
5 430
6
540
6
650
6
Set time 2 as the reference point(present time). K 320 K 210 430 540 650 + + = 100+ + + + 2 3 2 3 4 (1 + i ) (1 + i ) 1 + i (1 + i ) (1 + i ) (1 + i ) (1 + i )5 (1) Interest formula representaion K (P /F , 12%, 2) + K (P /F , 12%, 3), Solve equation (1), we have K = $1034.26. K =F