文档介绍：SJTUEngineering Economics-The 6th LectureInflations and Price ChangesReplacement ProblemsDr. Hu HaoShanghai Jiao Tong UniversitySJTUAgenda?Review of Last Lecture (15’)?S1: Dealing with Inflations and Price Changes (45’) ?1st Break (2:00-2:10 pm)?S2: Dealing with Replacement Problems(50’)?2nd Break (3:10-3:20pm)?S3: Tutorials and an Overview of Previous Course (3:20-4:30pm)SJTUPrinciples of money-time relationship Applications of money-time paring Alternatives Perform project evaluation on a before tax basis Depreciation and Depletion Evaluation of Alternatives on an After-tax Basis +Developing Cash Flows Economic AnalysisNational Economical Evaluation +Social Evaluation +Project EvaluationConcepts of Project EvaluationAlternative Selection (Decision)UncertaintyInflations and Price ChangesReplacement ProblemsSJTUSession 1Dealing with Inflations and Price ChangesSJTUGeneral Price Inflation?General price inflation is defined as an increase in the prices paid for goods and services bringing about a reduction in the purchasing power of the ary unit?Inflation is much mon than deflation?Deflation is the decrease in prices with an increase in the purchasing power of the ary unitSJTUMeasure of Price Change?Consumer Price Index (CPI)–CPI is posite price index that measures price changes in housing, transportation, clothing, food and other selected goods and services used by individuals and families?CPI annual inflation rate=[(CPI)k- (CPI)k-1 ]/ (CPI)k-1*100SJTUTerminology and Basic Concepts (1)?Actual dollars (A$): the number of dollars associated with a cash flow or a non-cash flow amount as of the time it occurs.?Real dollars (R$): dollars expressed in terms of the same purchasing power relative to a particular and Basic Concepts (2) ?General price inflation rate (f): a measure of the