Econ 400 Engineering Economy Introduction

ENGG ECON-INTRODUCTION
Engineering Economy- that branch of

Economics which involves the
application of definitive laws of
economics , theories of investment
and business practices to
engineering problems involving
costs, with the concept of obtaining
the maximum benefit at the least
cost.
1. 1 DEFINITION OF ENGINEERING
ECONOMY
-involves formulating, estimating and
evaluating the economic outcomes
when alternatives to accomplish a
defined purpose are available.
is a collection of mathematical
techniques that simplify economic
comparison
purpose is to aid in decision making
DECISION-result of choosing
alternative over another.
-alternatives refer to selection on
investment or use of funds ( capital)
amount of funds or capital is usually
limited or restricted in quantity
- decisions on how to invest capital
will affect the future
RATIONAL DECISION MAKING PROCESS
Personal Decision
Step 1. Recognize a decision problem
Needs a new car

Step 2. Define goals or objectives
Mechanical Security and lower

monthly payment
Step 3. Collect all relevant information
Gather technical as well as financial

data
Personal Decision
Step 4. Identify a set of feasible decision
alternatives
Option1. Buy
Brand A
Brand B
Option 2. Lease
Brand A
Brand B
Personal Decision
Step 5. Select a decision Criterion to use
Minimize monthly payment
Minimize R & M
Fuel economy
Reliability
Step 6. Select the best alternative
Engineering Design Problem
Decisions made during the design

phase of
a products development determine
the majority of the costs of
manufacturing the product
1. Getting and idea
Need ( necessity is the mother
of invention
2. Setting Design Goals and Objectives
Time
Simplicity of design
Size and weight same as existing

products
low production cost
Environmentally safe
Etc.
3. Evaluate design alternatives
Design 1, Design 2, sensitivity

4. Gauging Product Costing and
Pricing
5. Green Engineering
As the design and manufacturing process
become more complex, the engineer is making
decisions that will involve more money than ever
before with greater risk but also greater possible
benefits.
Thus the competent and successful engineer
must have an improved understanding of the
principles of science, engineering and economics
coupled with relevant design experience
Economics and design issues are inextricably
linked in the product/service life cycle
ROLE OF ENGINEERING ECONOMY IN
DECISION MAKING
Engineers play a major role in capital
investment decisions based on the
analysis , synthesis and design
efforts
The factors considered in making the
decision are a combination of
economic , non-economic factors and
intangibles
ROLE OF ENGINEERING ECONOMY IN DECISION
MAKING
People make decision- computers , mathematics
and other tools do not
Engineering Economy Techniques assists people
in making decisions.
Time frame of Engineering Economy is the future
The numbers used in Engineering Economy are
best estimates or forecast of what is expected to
occur.
DECISION MAKING
The Estimates will involve:
Cash Flow
Time of occurrence
Interest rate
The estimates made will be different
from what will occur, due to changing
circumstances and unplanned for events
DECISION MAKING
Sensitivity Analysis- analysis performed to
determine how the decision might change
based on varying estimates especially
those that may vary widely.
Engineering Economy can also be used to
analyze the past. Actual data are
evaluated if the result has met a specified
criterion like rate of return.
ROLE OF ENGINEERING ECONOMY IN DECISION MAKING
Procedure for selection of alternative. Problem Solving
approach and decision making process
1. Understand the problem and define the objective.
2. Define the feasible alternative solution and make
realistic estimates
3. Collect relevant information
4. Identify the criteria for decision making using one or
more attributes
5. Evaluate each alternative, using sensitivity to
enhance the evaluation
6. Select the best alternative
7. Implement the solution
8. Monitor the result
1. Types of Business Organization
Proprietorship
Partnership
Corporation

Proprietorship-owned by 1
individual
Advantage- easily formed,

organization cost low, tax at owners
personal tax rate. Cannot issue
stocks and bonds difficult to raise
additional financing
1.INTRODUCTION
Partnership-same as
proprietorship , except it has more
that one owner, Established by
written contract. Low cost and ease
of formation, Each partner is liable
for a businesss debt, limited life,
dissolved if one of the partners quits.
Corporation-legal entity created under

law. Separate from its owners and
managers.
(1) can raise capital from large numbers of
investors by issuing stocks and bonds (2)
permits easy transfer of ownership by
trading shares of stocks (3) allows limited
liability-limited to investment in business
(4) taxed differently from proprietorship
IMPACT OF ENGINEERING PROJECTS ON
FINANCIAL STATEMENTS.
Engineers must understand the business
environment in which the companys major
business decisions are made.
1. It is important for a project to generate
profit but it should also strengthen the firms
overall financial position ( cash position,
debt levels, rate of return on capital, market
position, competiveness , asset value etc.)
TYPES OF ENGINEERING ECONOMIC DECISIONS
(a) Service or Quality Improvementsimprovement of productivity, quality and
customer satisfaction
(b) New Products and Product Expansion- to
increase revenue due to increase in output:
- Production of new products
- Expansion to new geographic area
- Increase output of existing production or

distribution facilities
TYPES OF ENGINEERING ECONOMIC DECISIONS
(c) Equipment and Process Selection- involves
selecting the best course of action to meet a
projects requirements
- equipment selection
- material selection
- process selection
in general the basis of choice of item is the
largest savings generated assuming all items
meet the project requirement
TYPES OF ENGINEERING ECONOMIC
DECISIONS
(d) Cost Reduction- project is
expected to lower the firms current
operating cost.
(e) Equipment Replacement- replace
worn out or obsolete equipment
FUNDAMENTAL PRINCIPLES OF ENGINEERING
ECONOMICS
1. Money has time value associated with it. Because
we can earn interest on money received today, it is
better to receive money earlier than later.
2. All that counts is the difference between
alternatives-An economic decision should be based
on the differences among alternatives. An economic
decision should be based on the objective of making
the best use of limited resources. Whenever a choice
is made , something is given up. The opportunity
cost is the valu of the best alterrnative given up.
FUNDAMENTAL PRINCIPLES OF
ENGINEERING ECONOMICS
3. Marginal revenue must exceed
marginal cost.
Marginal Revenue- additional

revenue made possible by increasing
the activity by one unit. Marginal
Cost is the cost additional cost
incurred by the same activity.
FUNDAMENTAL PRINCIPLES OF
ENGINEERING ECONOMICS
4. Additional risk is not taken without
the expected additional return.
2. TIME VALUE OF MONEY

2.1 INTEREST
Interest-the cost of having money available
for use
Interest Paid- when money is borrowed
interest paid is the charge to the borrower for
the use of the lenders property or money.
Interest Earned- when money is loaned or
invested , the interest earned is the lenders
gain for providing the money
Interest rate percentage that is periodically
applied and added to an amount of money
over a specified length of time

2.1 INTEREST
Interest, interest rate and rate of return
computations
Paid
Interest = amount owed now - original amount
Earned
Interest= amount now - original amount
Interest Rate= Interest paid per unit time x 100%
original amount
Rate of Return = Interest earned per unit time x 100%
original amount
Interest period- time unit of the rate

SAMPLE COMPUTATIONS:
An employee borrows PHP 10,000.00 on April
1 and must repay a total of PHP 10,700.00
exactly 1 year later. Determine the interest
amount and interest rate.
Interest paid= PHP10,700.00 PHP10,000.00
= PHP 700.00
Interest Rate = PHP 700.00/ PHP 10,000.00 X
100%
= 7% per year

A Company plans to borrow PHP
20,000.00 from the bank for 1 year
at 9% interest to buy a new
equipment. (a) Compute the interest
and total amount due after 1 year.
(b) Construct a column graph
showing the original loan amount
and total amount due after 1 year

Total interest = PHP 20,000.00 x
9%/100
= PHP 20,000.00 x
0.09
= PHP 1,800.00 for

the year
Total Amount Due= PHP 20,000 +
PHP 1,800
= PHP

(a) Calculate the amount deposited 1 year ago to have
$ 1,000.00 now at an interest rate of 5% per year. (b)
Calculate the amount of interest earned during the
time period.
(a) Total amount = $ 1000.00
Total amount = Original amount + interest earned
Let P = original amount
Interest earned = P x ( interest rate)
= P x 0.05
Total Amount = P + P x 0.05
$ 1,000.00 = P ( 1+0.05)
P = $ 952.38
Interest earned = Total amount - original amount
= $ 1000.00 - $ 952.38
= $ 47.62

Should you buy something today or
save your money and buy it later?
CASE: Buying a refrigerator today will
cost
$ 100. Interest rate is 6% per year.
Option 1. Buy now
Option 2. Buy next year, inflation
rate maybe 4% or 8%

Option 1. Buy now , result Cost of refrigerator = $
100, balance is zero cash
Option 2. Buy next year.
Interest earned- 6% of $ 100 = $ 6
Total cash = $ 100 + $ 6
= $ 106
If inflation is 4%
original cost of refrigerator =

$ 100
additional cost due inflation= 4% of $ 100= 4
Total cost
$ 104
Cash balance = $ 106 - $104 = $ 2

Option 2. Buy next year.
Interest earned- 6% of $ 100 = $ 6
Total cash = $ 100 + $ 6
= $ 106
If inflation is 8%
original cost of refrigerator =

$ 100
additional cost due inflation= 8% of $ 100= 8
Total cost
$
108
Cash balance = $ 106 - $108 = -$ 2

Inflation-represents a decrease in the value of a
given currency. PHP 1 now will not be able to
buy the same number of pan de sal as the
same PHP 1 five years ago.
Purchasing Power the amount of goods or
services that your money can buy. Inflation
reduces the Purchasing power of your money
Earning Power- the amount that your money
can earn in a period of time . The earning
power should match the rate of return +
inflation rate allowance.

Types of Transactions Involving
Interest
Borrowing Money, Investing

money, Purchasing on credit

Elements of Transaction Involving Interest (I)
Principal (P) - the initial or original amount of
money invested or borrowed
Interest rate (i) measures the cost or price of
money , expressed as a percentage per unit of time.
Interest Period (n) - period of time which determines
how frequently interest is calculated.
Number of Interest periods (N) specified length of
time that marks the duration of transaction.
A plan for receipts and disbursements ( An) that
yields a particular cash flow pattern over a specified
length of time.
Future Amount of Money (F ) results from the
cumulative effects of the interest rate over a
number of interest periods

CASH FLOW DIAGRAM- represents time by
a horizontal line marked off with interest
periods. Arrows represents the net cash
flows over time. Upward arrows represent
net positive flows (receipts) downward
arrows represent net negative flows
(disbursements).
End of Period Convention- practice of
placing all cash flow transactions at the
end of an interest period.

METHODS OF CALCULATING INTEREST
Simple Interest- interest earned on only
the principal amount during each
interest period
Given : P, i , N
Total interest (I) earned/owned
I = (iP)N
Total Amount (F) available at end of N
periods
F=P+I
F = P + (iP)N = P(1+iN)

METHODS OF CALCULATING
INTEREST
Compound Interest- interest earned
or owed is calculated based on the
total amount at the end of the
previous period. The total amount is
equal to the original principal plus
accumulated interest that has been
left in the account.
F = P( 1+i)N

COMPOUND INTEREST
What is the amount of Interest earned on PHP
2,000 for 5 years at 10% per year. What is the total
amount after 5 years
( a) for simple interest ( b) interest compounded
yearly.
(a) Simple Interest
I = PiN = 2000x0.10x5 = 1000
F = P ( 1+ iN) = 2000 ( 1+ 0.10x5) = 3,000

(b) F = P ( 1+i)N = 2000(1+0.1)5 = 3221.02
I = F-P = 3221.02-2000 = 1221.02

Simple vs Compound Interest
Suppose you deposit PHP 1,000.00 in a
bank savings account that pays 8% per
year. Assume that you dont withdraw the
interest earned each period but instead
let it accumulate ( a) How much would
you have at end of year 3 with simple
interest (b) how much would you have at
end of year 3 with compound interest?

2.2 EQUIVALENCE
Option 1- receive PHP 20,000.00 today
Option 2- receive PHP 50,000.00 -10
years from now
Option 3- receive PHP 8,000.00 per year
for the next 10 years.
To be able to compare is to compare the
economic worth of the alternatives.
Without time value, we just add the cash
flows and compare the quantity/amount.
Cash flow diagram

2.2 EQUIVALENCE
Economic Equivalence-exists between 2
cash flows that have the same economic
effect and could therefore be traded for one
another in the financial market place.
- cash flow whether a single payment or a
series of payment can be converted to an
equivalent cash flow at any point in time.
present sum is equivalent in value to the
future cash flows

2.2 EQUIVALENCE
It is equivalent because if you have
the present value today, you can
transform it into future cash flows by
investing it at an interest rate, also
referred to as discount rate.

2.2 EQUIVALENCE
Suppose that we invest PHP 1,000.00
at 12% annual interest for 5 years .
F = future sum P = present sum=
PHP1000.00
i = interest
N = 5 yrs
F= P(1+i)N = PHP1000(1+0.12)5 =
PHP 1,762.34

2.2 EQUIVALENCE
Suppose you are offered the
alternative of receiving cash of PHP
3,000.00 at the end of 5 years or P
pesos today. You can deposit the P
pesos at 8% interest per year. What
value of P would make you indifferent
to make the choice between P pesos
today and PHP 3,000 -5 years from
now.

2.2 EQUIVALENCE
Given: F = PHP 3000.00, i = 8%
N= 5
Required: P
F = P ( 1+i)N
P = F / (1+i)N = PHP 3000/ ( 1+0.08)5
P = PHP 2,042
Cash Flow Diagram.

2.2 EQUIVALENCE
Equivalence calculations require a
common time basis for comparison.
When selecting a point in time , we
commonly use either the present
time which yields present worth of
cash flows or some point in the
future which yields the future worth
of the cash flows.

PROB. Which of the alternative would
you rather receive, assuming an
interest rate of of 8% compounded
annually?
Alternative 1: Receive PHP

100,000 today
Alternative 2: receive PHP 120,000

two years from now.

2.3 INTEREST FORMULAS FOR SINGLE
CASH FLOWS.
2.3.1 Compound Amount Factor
Given a present amount P, interest
rate i, interest period N
Required: The accumulated amount
or future amount F.
F = P ( 1+i)N
Compounding process- the process
for finding the future amount F
Compound Amount Factor = ( 1+i)N

2.3 INTEREST FORMULAS FOR SINGLE CASH
FLOWS.
2.3.2 Present Worth Factor
Given: The future sum F, interest period

N and interest rate i ,
Required: Determine the present amount

P
P = F / ( 1+i)N
Discounting Process- the process of

finding
the present amount P.
Present Worth or Discount Factor = 1/
( 1+i)N
2.3 INTEREST FORMULAS FOR

SINGLE CASH FLOWS.
2.3.3 Solving for Time and Interest
Rate:
Two forms :
Future sum/value form: F =

P(1+i)N
Present sum/ value form: P = F/

(1+i)N
There are 4 variables F, P, N, i, it may
be necessary to solve for either i , or
PROB. What will be the amount

accumulated by each of the following
present investments?
(a) PHP 7,000 in 8 years @ 9%
compounded annually
(b) PHP 1,250 in 12 years @ 4%
compounded annually
PHP 5,000 in 31 years @ 7%
compounded annually
(d) PHP 20,000 in 7 years @ 6%
compounded annually

PROB. What is the present worth of
the following future payments?
(a) PHP 4,500 -6 years from now at
7% compounded annually
(b) PHP 6,000 -15 years from now at
( c) PHP 20,000 -5 years from now at
(d) PHP 12,000 -8 years from now at

PROB. How many years will it take an
investment to triple itself if the
interest rate is 9% compounded
annually?
PROB. Suppose the buy a share of
stock at PHP 10 today and sell it at
PHP 20 five years from now? What is
the interest rate on the share of
stock?

2.4 UNEVEN PAYMENT SERIES
Involves a series of disbursements
and receipts, with no clear pattern.
2.4.1 Present Sum = Sum of
individual present sum of each
payment
Given: A1, A2, A3
P1 = A1/(1+i)N1,
P = P1+P2+P3+....
P2 = A2/( 1+i)N2

2.4.1 Present Sum = Sum of individual
present sum of each payment
PROB. If you desire to withdraw the
following amounts over the next five years
from a savings account that pays 7%
interest compounded annually, how much
do you need to deposit now? Year 2- PHP
2,000, Year 3-PHP 3,000, Year 4-PHP 6,000,
Year 5-PHP 8,000,

PROB. A company borrowed PHP
120,000, at an interest rate of 9%
compounded annually over six
years . The loan will be repaid in
instalments at the end of each year
according to the accompanying
repayment schedule. What size of
the last payment (X) that will pay off
the loan?

2.4.2 Future Sum = Sum of individual
future sum of each payment
Given: A1, A2, A3
F1 = A1(1+i)N1,
F = F1+F2+F3+....
F2 = A2( 1+i)N2

2.4.2 Future Sum = Sum of individual
future sum of each payment
PROB. If PHP 1,000 is invested now,
PHP 1,500 two years from now, PHP
2,000 four years from now at an
interest rate of 6% compounded
annually, what will be the total
amount in 10 years?

2.4.2 Future Sum = Sum of individual future sum of
each payment
PROB. You are preparing to buy a vacation home
eight years from now. The home will cost PHP
5,000,000 at that time. You plan on saving three
deposits at an interest rate of 10% compounded
annually.
Deposit 1: Deposit PHP 1,000,000 today
Deposit 2: Deposit PHP 1,200,000 two years from
now
Deposit 3: Deposit PHP X five years from now.
How much do you need to invest in year 5 to ensure
that you have the necessary funs to buy the
vbacation home at end of year 8?
2.5 EQUAL PAYMENT SERIES

2.5.1 FUTURE SUM
Given : A equal amount series of cash flows
i, - interest rate, N-interest period
Required: Find F-future sum, amount
F = A + A(1+i)+ A(1+i)2+.+A(1+i)N-1 (1)
Mult by (1+i) (1)
(1+i)F= A(1+i)+A(1+i)2+ .+A(1+i)N
(2)
Subtract (1) from (2)
F(1+i) F = -A + A(1+i)N
F = A[(1+i)N-1]/i

2.5.1 FUTURE SUM

PROB. What is the future worth of a series of
equal year-end deposits of PHP 5,000 for 10
years in a savings account that earns 8%
annual compound interest if .
(a) All deposits are made at the end of each
year
(b) All deposits are made at the beginning of
each year

2.5.1 FUTURE SUM

PROB. What is the future worth of the
following series of payments?
(a) PHP 4,000 at end of each year for six
years at 7% compounded annually.
(b) PHP 6,000 at end of each year for nine
years at 8.25% compounded annually.
(c ) PHP 3,000 at end of each year for 22
years at 9% compounded annually.
(d) PHP 9,000 at end of each year for 30
years at 10.75% compounded annually.

2.5.2 SINKING FUND Finding

equal amount A , given F, i , N
Sinking Fund-an interest bearing
account into which a fixed amount is
deposited each interest
period.Purpose is to replace fixed
assets.

2.5.2 SINKING FUND Finding

equal amount A , given F, i , N
A = F [i/(1+i)N-1]

2.5.2 SINKING FUND Finding equal

amount A , given F, i , N
PROB. You want to set up a college savings
plan for your daughter. She is currently 10
years old and will go to college at age 18.
You estimate that she will need at least PHP
1,000,000 in the bank when she starts
college. How much do you need to save and
deposit each year in order to have the
necessary funds if the current rate of
interest is 7% compounded yearly? Assume
that end of year payments are made.

2.5.2 SINKING FUND Finding equal amount A , given

F, i , N
PROB. What equal annual series of payments must be
paid into a sinking fund in order to accumulate the
following amounts?
(a) PHP 12,000 in 13 years at 4% compounded annually.
(b) ) PHP 25,000 in 8 years at 7% compounded annually.
( c) ) PHP 15,000 in 25 years at 9% compounded
annually.
(d) ) PHP 8,000 in 8 years at 8.85% compounded
annually.

2.5.3 Capital Recovery Factor (Annuity
Factor):
Given : P, i, N, Required : A
From : A = F [i/(1+i)N-1] Sinking Fund
Form
Substitute : F = P(1+i)N
A = P(1+i)N [i/(1+i)N-1]
A = P[(1+i)N i/(1+i)N-1]

2.5.3 Capital Recovery Factor (Annuity Factor):
PROB. What equal annual payment series is
required in order to repay the following present
amount?
(a) PHP 25,000 in five years at 8% interest
compounded annually.
(b) PHP 2,500 in four years at 9.5% interest
(c ) PHP 9,000 in three years at 11% interest
(d) PHP 23,000 in 20 years at 7% interest

Consider the following 2 savings plan starting at
age 21.
Option 1. Save PHP 20,000 a year for 10 years. At
end of 10 years , make no further savings, but
invest the amount accumulated at the end of 10
years until you are 65 years old. (Assume the first
deposit is made when you are 22.)
Option 2. Do nothing for the first 10 years . Start
saving PHP 20,000 a year every year therafter
until you reach 65.Assume that the first deposit
will be made when you turn 32.
If the interest rate is 8% compounded annually,
which plan will give you more money saved by the
time you turn 65.

2.5.4 Present Worth Factor
Determination of how much to
invest today in order to get the
series of equal payment
From
A = P(1+i)N [i/(1+i)N-1] we
solve for P
P = A [(1+i)N-1/i(1+i)N]

2.5.5 PRESENT VALUE OF PERPETUITIES
A Perpetuity is a stream of cash flows
that continues forever.
To calculate the present value of
perpetuity , we evaluate the present
value of a series of equal payment by
letting N
P = A/i

2.6 DEALING WITH GRADIENT SERIES
2.6.1 Handling Linear Gradient Series.
Cash flows can vary linearly , increasing

or decreasing by a set amount G, the
gradient amount.
Each payment An = (N-1)G,

If G > 0 the gradient is increasing
If G < 0 the gradient is decreasing
The gradient series can be considered as a
composite of a uniform series of N
payments A1 and a gradient series of
increments of a constant amount G.

2.6.1 Handling Linear Gradient Series.
Present Worth Factor : Linear Gradient.
Given: G, N and i , Find P
P = 0+G/(1+i)2 + 2G/(1+i)3+ + (N1)G/( 1+i)N
P = G[(1+i)N-iN-1/i2(1+i)N]

2.6.2 Handling Geometric Gradient
Series.
A cash flow series in which the
payment increase by some fixed rate
( not a fixed amount) or constant
percentage ( geometric) .
The type of increase is termed
compound growth

2.6.2 Handling Geometric Gradient
Series.
Let g = the percentage change from
one period to the next
An = A1(1+g)N-1,
N = 1, 2, 3.. N

OPTIONS FOR LOTTO:
OPTION 1: Lump sum Payment- $ 3.4 M
OPTION 2: Annual Payment : 26
graduated annual payment. First
payment $ 175,000, Second payment:
$189,000 for the next 25 years. These
payments would increase by $ 7,000 per
year to a final payment of $ 357,000.

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Econ 400 Engineering Economy Introduction

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ENGG ECON-INTRODUCTION

Engineering Economy- that branch of

Needs a new car

Mechanical Security and lower

Gather technical as well as financial

Minimize monthly payment

Decisions made during the design

Size and weight same as existing

low production cost

Design 1, Design 2, sensitivity

1. Types of Business Organization

Advantage- easily formed,

Corporation-legal entity created under

- Production of new products

- Expansion to new geographic area

- Increase output of existing production or

Marginal Revenue- additional

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

= PHP 1,800.00 for

2. TIME VALUE OF MONEY

Let P = original amount

Interest earned = P x ( interest rate)

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

Interest earned- 6% of $ 100 = $ 6

Total cash = $ 100 + $ 6

original cost of refrigerator =

additional cost due inflation= 4% of $ 100= 4

Cash balance = $ 106 - $104 = $ 2

2. TIME VALUE OF MONEY

Interest earned- 6% of $ 100 = $ 6

Total cash = $ 100 + $ 6

original cost of refrigerator =

additional cost due inflation= 8% of $ 100= 8

Cash balance = $ 106 - $108 = -$ 2

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

Borrowing Money, Investing

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

I = PiN = 2000x0.10x5 = 1000

F = P ( 1+ iN) = 2000 ( 1+ 0.10x5) = 3,000

I = F-P = 3221.02-2000 = 1221.02

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

Alternative 1: Receive PHP

Alternative 2: receive PHP 120,000

2. TIME VALUE OF MONEY

2. TIME VALUE OF MONEY

Given: The future sum F, interest period