In the context of engineering economy, what does 'i' stand for?

In the context of engineering economy, 'i' stands for the interest rate. The interest rate is a critical component in financial calculations because it represents the cost of borrowing money or the return on investment for capital. It is expressed as a percentage and can be used to determine the present value and future value of money.

In many financial formulas, the interest rate is used to compound or discount cash flows over time, which is essential for decisions regarding investments, loans, and project evaluations. For example, when evaluating the future value of an investment, the interest rate determines how much the original amount will grow over a specified period. Understanding the significance of the interest rate is crucial for professionals in fields such as finance, engineering, and project management, as it affects the viability of projects and investment decisions.