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Engineering Economy - Engineering

Q1:

If P is principal amount, i is the rate of interest and n is the number of periods in years, then the interest factor is :

A (1 + ni)

B (ni - 1)

C ni

D None of these

ANS:A - (1 + ni)

If P is the principal then the simple compound after the first year(A)=P+P*i*n.(can also be written as P(1+i*n).

Now, the interest factor simply is by how many times folds the principal has increased.

So, the principal has been increased by A/P =[P(1+ni)]/P =(1+ni).