Chapter I Ordinary Simple Interest based on bankers year Exact simple interest exact number of days in a given year

ar Two types of rate of interest 1. Nominal rate of interest the basic annual rate of interest 2. Effective rate of interest the actual rate of interst in one year

Exact interest is an interest computed on a 365-day year. Compound Interest is the interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Rate of interest is a rate which is charged or paid for the use of money. Nominal rate of interest refers to the rate of interest before adjustment for inflation( in contrast with the real interest rate) Effective rate of interst is the actual interest paid on a loan or earned on a deposit account depending on the frequency of compunding or effect on inflation. Discount is the amount by which a bands par exceeds its market price. Cash flow diagram allows you to graphically depict the timing of cash flow. Equation of Value equation of value is obtained by setting the sum of the values on a certain comparison or focal date of one set of obligations equal to the sum of values on the same date of another set of obligations.

Assignment Economics is the social science that deals with the production, distribution and consumption of good and services and with the theory and management of economies or economic system. Engineering economy- is the application of engineering or mathematcal analysis and synthesis to decision making in economics. Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. Interest is a fee paid by the borrower of assets to the owner as a form of compensation for the use of the assets. Simple interest is an interest paid only on the principal of a loan. Ordinary Interest is an interest computed on the basis of a 360-day year.

Chapter II Annuity is a series of equal payments occuring at equall period or interval of time. Amortization is a method of paying including the principal ad interest which is usually done in a series of equal payments occuring at equal period or interval of time. 1. Ordinary Annuity is an annuity where payments are made at the end of each period. 2. Deferred Annutiy is ana annuity where payments are made late by several periods from the start of annuity. 3. Perpetuity is ana annuity where payments are made indefinitely or forever. 4. Annuity due is an annuity where payments started at hte beginning of annuity periods. 5. Annuity with continuous Compounding of interest Application of Annuity 1. Bond value 2. Capitalized Cost 3. Arithmetic Gradient a series of payments occuring at equal period or interval of time where payments have common difference. 4. Geometric gradient a series of payments with common ratio occuring at equal period or interval of time. Chapter III 1. 2. 3. 4. Straight Line method Sinking fund method Sum of the years digits method Declining balance method

5. Double declining balance method 6. Service output method 7. Percentage or Depletion Allowance

Assignment Depreciation is the decrease in the value of physical property with the passage of time. Depletion refers to the decrease in the value of the property due to the gradual extraction of its content. Straight Line method is a method which assumes that the loss in value is directly proportional to the age of the property. Sum of the Year digit method is the depreciation charge during the specific number of years. Declining balance method is sometimes the constant percentage method or the Matheson formula, it is assumed that the annual cost of depreciation is a fixed percentage of the salvage value at the beginning of the year. Sunk Cost is the total depreciation that has taken place up to any given time. Valuation is the process of determining the value of certain property for specific reasons. Salvage value is the price that can be obtained from the sale of the property after it has been used. Book Value is the worh of a property as shown on the accounting records of an enterprise.

Chapter IV

Break-even Point where the sales volume is just enough to pay the cost of production. There is no profit or loss. Fixed cost cost not affected by the number of units produced. Variable Cost cost which are affected by the number of units produced such as materials, labor, and other variable cost. Unhealthy Point where the sales volume is just enough to pay the dividends. Income and Profit Relation sales=FC+VC+ dividends+ profit or Income

Chapter IX. Minimum Cost Analysis Economic Order Purchased Quantity Economic Production Quantity Warehousing for effective product Distribution

Chapter V Comparison of Alternatives 1. 2. 3. 4. 5. Annual worth Cost method Present Worh Cost Method Future Worth cost method Equivalent Uniform Annual Cost Rate of Return method

Chapter VI. Benefit Cost Ratio B/C = benefits disbenefits/ cost B/C = Annual cost / EUAC B/C = benefits/ EUAC

Chapter VII. Inflation The decrease in the moneys purchasing power due to increase in prices of goods and services.