What You Will Be Learning

Within this big picture (Fig. 12.1) our humble objective is to provide you with the capability to approach real-life and engineering problems, situations where it is necessary to decide among different alternatives that are technically equivalent. In real-life engineering you will face several situations where the final decision will depend on your technical and economic analysis. For example, a manufacturer is offering you more efficient and automatic equipment to replace your current 

At this stage, we will introduce and illustrate the concept of interest rate (compound interest rate) and, in addition, provide a few elementary formulas of financial mathematics (Sect. 12.5) to empower and give you the capacity to solve all the problems presented in this chapter. 

4 What Is the Interest Rate Some Simple Calculations 

As mentioned, money has value throughout time. If you want a loan for some specific time period—say 1 month— then you need to pay interest to use, for your own benefit, this money for 1 month. For example, if you want a loan of L for 1 month and the interest rate is r % per month (compound interest), then after 1 month you need to return Lp to the lender, where the financial mathematical equivalence between L and Lp is 

In words, in this case, the future value (Lp) is equivalent to the present value (L) multiplied by 1 plus the interest rate divided by 100 (because the interest rate was given as a percentage) with an exponent equal to 1 because the loan was for 1 month. If the interest rate is given in decimal form, then the financial mathematical equivalence between Lp and L is 

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Chapter Opener Science is occurring all around you, and the opening photo of each chapter will preview the science you will be learning about. The Chapter Preview will give you an idea of what you will be learning about, and you can try the Launch Lab to help get your brain headed in the right direction. The Foldables exercise is a fun way to keep you organized. 

NOW that you are in a chemistry class, you may be wondering what you will be learning. What questions in science have you been curious about Perhaps you are interested in how smog is formed, what causes ozone depletion, how nails form rust, or how aspirin relieves a headache. Just like you, chemists are curious about the world we live in. 

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