Engineering- Engineers use knowledge to find
new ways of doing things economically.
(Syempre dapat yung mabubuong solusyon ng
isang engineer ay pasok sa economiya, kung
kaya bang bilhin ng mga target consumers, hindi
kaba malulugi, mag bebenefit ba both
producers and consumers)
Engineering Economy- Demonstrate a positive
balance of long term benefits over long term
costs. (magtatagal bas a market yung nagawa
mo)
*Fundamental Principles of Engineering
Economy
1. Develop the alternatives.- create backup
plans para kapag hindi nagwork si Plan A, meron
ka kaagad na nakaresebang another solution.
2. Focus on the Differences- kailangan alam mo
ang pinagkaiba ng mga nabuo mong alternatives
para madetermine mo kung alin yung mas
better ang outcome.
3. Use a consistent viewpoint- kaninong
interest ba ang masusunod? Ang decision ay
nakafocus lang sa interest ng isang tao o grupo.
Kung sino ang client mo sila dapat ang susundin
mo.
4. Use a common unit of measure- consistent
ang unit, kung nakapesos ang isa dapat peso din
lahat.
5. Consider all relevant criteria- huwag
kakalimutan and ibang conditions. Consider
both outcomes. Like bagyo, natural disasters.
6. Make risk and uncertainty explicit- Nobody
can predict the future accurately. Be ready!
Paghandaan o babaan ang mga possible risks na
dumating after your decision.
7. Revisit your decisions- Sure ka na ba talaga
diyan?
*Engineering Economic Analysis Procedure
1. Problem Definition- idefine mo kung ano
bang problem yung susulusyunan mo.
2. Development of Alternatives- create
different solutions
3. Development of Prospective Outcomes- pros
and cons ng mga alternatives mo. Consider cash
flow, kung malulugi ka ba dyan.
4. Selection of a Decision Criterion- Select
among alternatives that will best serve the long
term interests.
5. Analysis and Comparison of Alternativespagkumparahin mo yung mga alternatives mo
specially based sap era na papasok.
6. Selection of the Preferred Alternativechoose
7. Performance Monitoring and Post evaluation
Results- imonitor mo yung napili mong
alternative para if may Nakita kang need of
improvement, masulusyunan mo agad.
Consumer Goods and Services- products and
services that are directly used by people to
satisfy their wants.
Producer goods and Services- produce
consumer goods and services.
Necessities- to support human life.
Luxuries- desired by humans
Demand- quantity of a certain commodity that
is bought at a certain price at a given place and
time. (during Christmas, indemand ang mga
Christmas lights kaya kahit anong price nyan
bibilhin at bibilhin nila yan)
Elastic Demand- pagbaba ng presyo, pagtaas din
ng sales
Inelastic Demand- pagbaba ng presyo, pagbagal
ng sales.
Unitary Elastic of Demand- product of volume
and price is constant.(hindi nagbabago)
Perfect Competition- like sa public market,
maraming magkakaparehas na produkto pero
lahat ay kumikita.
Monopoly- opposite of perfect competition.
Kung sino lang yung nagbebenta, walang kayang
magbenta pa ng iba. (Facebook, Google)
Oligopoly- few suppliers by one will almost
inevitably result in similar action by the others.
Supply- quantity of a certain commodity (supply
ng produkto)
*Law of supply and demand- equal ang supply
at demand,equal and supply at presyo. Pag
tumaas and presyo ng produkto, tataas din and
supply.
*Law of diminishing return- increase in one
factor of production, lower additional returns.
(Nagtayo ka ng restaurant tapos masarap yung
pagkain mo, Maganda yung ambiance ganyan,
mura yung pagkain kaso mababa yung sales mo
kasi kulang ka sa waiter so magtatagal yung
service na magiging resulta sa pagkainip ng mga
customers mo kaya hindi na babalik kaya ang
ginawa mo dinamihan mo yung waiter mo eh
napasobra ka kaya ang nangyari, ang dami mong
pinapasahod kaya umunti na yung balik ng pera
sayo. Dapat balance lang.
Fixed Costs- unaffected by changes in activity.
Kung ano ang presyo nyan sa una, yan pa din
presyo hanggang sa huli (Taxes, interest costs,
borrowed capital)
Variable Costs- price depend on the total
quantity of output. (cost of labor depend on the
amount of product he will do)
Incremental Costs- additional cost. (Umutang
ka, nagbigay ng interest, yung interest ang
incremental cost.)
Direct Costs- price is measured to a specific
output (Kung ano yung presyo ng mga materials
na ginamit mo, yun din ang ibibgay sayo)
Indirect Cost- difficult to allocate (Emergency
funds, maintenance syempre hindi naman sure
kung magkano ba lets say yung pang maintain
mo ng kotse mo kasi nagbabago naman ag
presyo ng produkto)
Overhead Costs- not direct or direct material
costs.
Standard Costs- established in advance
(nakaplanong presyo)
Cash Costs- payment of cash
Book costs- do not involve cash payments( lets
say nag invest ka sa isang kumpanya ng 10%
yung kikitain mo don yun ang book cost)
Sunk Cost- occurred in the past
Opportunity Cost- cost of the best rejected
opportunity.
Life Cycle Cost- summation of all costs.
Module 2
Capital- any financial resources owned by a
person or by a business that are beneficial in
boosting growth and generating revenue.
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Money earns interest over time. The
time value of moey says that a peso
received today is worth more than a
peso received tomorrow. (Lumalago ang
pera lalo kung iiinvest mo)
Develop and improve the future
Generate sustainable revenue
*Types of Capital
1. Equity Capital- owned by individuals by
investing in a company to gain more profit.
2. Borrowed Capital- Borrowing money with
interest.
3. Human Capital- things a human posses that
make them able to produce more outputs
(Education, skills, talents)
3. Social Capital- Relationship with other
people/ Connection.
4. Natural Capital- Living things.
*Cash Flow Diagram- summarize a cash flow
Elements of a Cash Flow
1. Horizontal Line ------ time
2. Arrow(up)- benefits, revenue, inflow of
cash (Mga pumapasok na pera)
3. Arrow(down)- outflow of cash such as
expenses cost (Lumalabas na pera)
*Types of Cash Flow
1. Single Cash Flow- Single Present(P) and single
Future (F)
4. Geometric Gradient Series- increases or
decreases by a fixed percentage.
5. Irregular Series- No pattern
*Interest- added money for borrowing.
(Pinapatong sap era na inutang)
Simple Interest- short term loans where the
period is measured in days.
Ordinary Simple Interest- assume na merong
360 days.
Exact Simple Interest- based on the exact
number of days in a year. 365 for ordinary, 366
for leap year.
Discount- interest deducted in advance.
Compound Interest- interest on top of interest.
(papatungan ulit ng interest)
Rate of Interest- cost of borrowing money
Types of ROI
1. Nominal ROI- basic annual rate of
interest.
2. Effective ROI- actual ROI a year.
Continuous Compounding- continuous
throughout the year.
*Annuities- a series of equal payments made at
equal interval of time. (hulugan, installment
plans)
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2. Equal Uniform Series- Series of Equal Cash
flow.
3. Linear Gradient Series- cash flow increases or
decrease by uniform amount.
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Ordinary Annuity- one where equal
payments are made at the end of each
payment period starting from the first
period.
Deferred Annuity- payment of the first
amount is deferred a certain number of
periods after the first.
Annuity Due- one where payments are
made at the start of each period,
beginning from the first period.(kasabay
na sa downpayment or from the start
yung unang hulog)
Perpetuity-forever
*Capitalized Cost- sum of the first cost and the
present worth of all costs of all costs of
replacement, operation and maintenance for a
long time forever.
*Arithmetic Gradient Series-cash flow changes
by the same amount in each cash flow period.
*Geometric Gradient Series- period payment
changes by a constant percentage
CHAPTER 3 DEPRECIATION AND DEPLETION
Depreciation- the decrease in the value of a
physical property with the passage of time.
(pagbaba ng presyo pagdaan ng panahon.)
-
Malaman kung nakarecover o Nabawi
ang nagastos
To charge the cost of producing
products to the price of the product
Types of Depreciation
1. Physical Depreciation- physical ability
of an equipment (baka nangalawang na
yung producing machine mo)
2. Functional Depreciation- lessening in
demand depends on the design (angkop
pa ba theme yung product)
Properties Depreciable Assets
1.
2.
3.
4.
Life must be greater than 1 year
Used in business to produce income
Loses its value due to natural cause
Not an inventory stock
First Cost(FC)- cost of acquiring an asset
Book Value(BV)- worth of property
Salvage Value(SV)- amount that will be paid
after it has been used. (second hand value)
Useful Life (L)- expected period that a property
will be used to produce income(gaano katagal
itatagal yung product na ibebenta mo)
Physical Life- length of time of capability of
performing the function
Economic Life- length of time the property may
be operated at a profit.
Recovery period-number of years
Recovery rate- percentage
Methods of Depreciation
1. Straight Line Method (SLM)- simplest
depreciation. Loss in the value is
proportional to the age of the
equipment
2. Sinking Fund Method(SFM)accumulate for replacement.
3. Declining Balance Method- constant
percentage method
4. Double Declining Balance MethodRate of depreciation k is replaced by 2/L
5. Sum of the year digit method(SOYDM)depreciation changes from year to year.
6. Service Method(Number of hours
used)
7. Output Method(Number of units
produced)
*Depletion- applied in case of wasting assets
like oil, gas, mines due to gradual extraction of
the contents. A practice to return annually a
part of the investment of each investor instead
of accumulating a depletion fund.
Cost Depletion- petroleum and mining projects
Steps
1. Determination of the depletion base
2. Computation of depletion rate per unit
3. Computation of depletion/depreciation
charge
Equity Capital- supplied and used by the owners
of an enterprise in the expectation that a profit
will be earned.
Borrowed Funds- debt