Homogeneous Model

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Welcome to the lecture on interest and cash flow diagrams. So, so far we have studied about interest and interest rate. In engineering economic analysis, different engineering alternatives are evaluated. These alternatives estimate amount and timing of future receipts and dispersements. So, what we have seen that something a lender is investing and he's getting a return on it from the

borrower. It means there are proposals and from there you have different type of receipts and disbbursements. Receipts means something somebody is getting that is receipt and dispersement means something somebody is paying that is disbbursement. So in this lecture we will study about effect of time and interest rate because it has to be given

the importance effect of time as well as interest rate has bearing on the amount which has ultimately to be paid by the borrower. So basically we are dealing with the monetary transactions some amount is taken by the borrower and he has to pay the amount itself after certain amount of time. So in that both

interest rate as well as time plays an important role ultimately what he has to pay interest may be charged in different way over time by the lender. So basically the lender is charging the interest in a different way uh to the borrower. So we will see how it is. Again the rental rate for a sum

of money is usually expressed as certain percentage of the sum to be paid for its use for a period of 1 year. We have already discussed about interest rate. It is nothing but the amount you get if x amount is being given by the lender then after one year he will get x plus