Documentos de Académico
Documentos de Profesional
Documentos de Cultura
ENGINNERING ECONOMY- uses mathematical formulas to account for the time value
of money and to balance current and future revenues and costs. It is the analysis
and evaluation of the factors that will affect the economic success of engineering
projects.
States that people will buy more of a product at a lower price than at a higher
price, if nothing changes
States that at a lower price, more people can afford to buy more goods and
more of an item more frequently, than they can at a higher price
States that at lower prices, people tend to buy some goods as a substitute for
others more expensive
TYPES OF DEMAND
1. ELASTIC DEMAND exists when there is a greater change in quantity
demanded as a response to a change in price.
2. INELASTIC DEMAND exists when there is a lesser change in quantity
demanded in response to a change in price.
UNITARY- exist when there is an equal change in price and in quantity demanded
(increase or decrease)
FACTORS THAT INFLUENCE DEMAND
1. INCOME when income increases people are able to buy more.
2. POPULATION As the population grows, demand for goods and services
increases.
3. TASTE AND PREFERENCE Assuming prices are constant , people go more for
the goods they prefer as shaped by their tastes and biases.
4. PRICE EXPECTATION When people anticipate price increase, demand for its
product increases
5. PRICE OF RELATED GOODS When products price increases, people shift to
its substitutes, which known as goods.
CHAPTER 2
INTEREST the return on capital or cost of using capital. It is the amount of money
paid for
the use of borrowed capital or the income produced by money, which has been
loaned.
SIMPLE INTEREST calculated using the principal only, ignoring any interest that
had been accrued in preceding period.
I =Pni
F=P+ I =P+ Pni
F=P ( 1+ )
Where:
I = Interest
P = principal or present worth
N = number of interest period
I = rate of interest per interest period
F = accumulated amount or future worth
(1+i)n
amount factor and is designated by the functional symbol F/P, i%,n. thus,
F=P ( 1+i )n
P,i ,n
F /
F=P
The symbol F/P, i%,n is read as F given P at i% in n interest periods
Ex. What rate of interest compounded annually must be received if an
investment of 5400 made now will result in a receipt of 7200 in 5 years?
Ans. 5.92%
Ex. What amount will be accumulated by 4100 in 10 years at 6%
compounded annually
Ans. 7342.48
RATES OF INTEREST
(1+i)m 1
E = effective rate
F = future worth rate
i = rate of interest/ interest period
m = number of compounding periods
it
I =P e
Where:
I = interest
i = rate of interest/ interest period
t = number of compounding periods
ex. Philip invested 100 on bank. The bank offers 5% interest compounded
continuously in a savings account. Determine (a) how long will it require for him to
earn 5 (b) the equivalent simple interest rate for 1 year bank?
Ans. .9758 year; 5.127%
DISCRETE PAYMENTS
The solution in discrete payments or number of transactions occurring at
different periods is taking each transaction to the base year and equating each
value.
Ex. Acosta holdings borrowed 9000 from smith corporation on January 1,
1998 and 12000 on January 1 2000. Acosta holdings made a partial payment of
7000 on January 1, 2001. It was agreed that the balance of the loan would be
amortized by two payments. One on January 1, 2002 and one January 1, 2003.the
second being 50% larger than the first. If the interest rate is 12% what is the
amount of each payment?
Ans. 9137.18; 13 705.77
BANKERS DISCOUNT (COMPOUNDING INTEREST)
Certain banks lend money in such a way they deduct the interest on the
money. They actually dont lend the money you asked for. This type of computing
for money is called bankers discount. The money received by the borrower after the
discount has been deducted is called proceeds.
D=FP
D = Fdn
Computing for the relationship between the interest rate and the discount
rate
For simple rate
i
=d
1+
d=
1(1+)
n
(1nd) 1
i=
n
Ex. Ms. Glydel marquez borrowed money from a bank. She received
from the bank 1342 and promised tor epay 1500 at the end of 9 months. Determine
the (a) simple interest (b) discount rate (compound rate of discount)