ECON MALALA

Question 1

the analysis and evaluation of the factors that will affect
the economic success of engineering projects to the end that a recommendation can be
made which will ensure the best use of capital.

Answer 1

ENGINEERING ECONOMY

KW
- Econ SUCCESS OF ENG

Question 2

the interest on a loan that is based only on the principal. Usually
used for short-term loans where the period is measured in days rather than years.

Answer 2

SIMPLE INTEREST

KW
- only on the principal

Question 3

2 TYPES OF SIMPLE INTEREST

Answer 3

ORDINARY AD EXACT SI

Question 4

Interest is computed on the basis of 12 months of 30 days
each which is equivalent to 360 days a year.

Answer 4

ordinary SI

360 days

Question 5

interest is computed based on the exact number of days in a
given year which is 365 days for a normal year and 366 days during a leap year

Answer 5

Exact SI

Question 6

Quantity of a certain commodity that is bought at a certain price at a given place and time

Answer 6

Demand

Question 7

the interest deducted in advance

Answer 7

Discount

Question 8

the discount on one unit of principal for one unit of time.

Answer 8

Rate of Discount

Question 9

interest which is based on the principal plus the previous
accumulated interest.

Answer 9

Compound Interest

Question 10

a graphical representation of cash flows drawn on a time scale

Answer 10

Cash flow diagram

Question 11

the cost of borrowing money or the amount earned by a unit
principal per unit time.

Answer 11

Rate of Interest

Question 12

2 types of rates of interest

Answer 12

– Nominal Rate of Interest
– Effective Rate of Interest

Question 13

is the basic annual rate of interest. It specifies the rate of interest and the number of interest periods in one year.

Answer 13

NOMINAL RATE OF INTEREST –

Question 14

is the actual or the exact rate of interest earned on the principal during a one-year period.

Answer 14

EFFECTIVE RATE OF INTEREST

Question 15

based on the assumption that cash payments occur once
per year but compounding is continuous throughout the year.

Answer 15

Continuous Compounding

Question 16

a series of equal payments occurring at equal interval of time.

Answer 16

Annuities

Question 17

this type of annuity is one where the payments are made at the
end of each period beginning from the first period

Answer 17

Ordinary Annuity

Question 18

this type of annuity is one where the first payment is made
several periods after the beginning of the annuity.

Answer 18

Deferred Annuity

Question 19

is an annuity wherein the payments continue indefinitely.

Answer 19

PERPETUITY

Question 20

The ______ of any property is the sum of its first cost and the present worth of all costs for replacement, operation, and maintenance for a long period or forever.

Answer 20

Capitaliized Cost

Question 21

A series of disbursements or receipts that increases or decreases in each
succeeding period by a constant amount

Answer 21

Gradient

Question 22

a financial security note issued by businesses or corporations and by the government as a means of borrowing long-term fund. It may also be defined as a long-term
note issued by the lender to the borrower stipulating the terms of repayment and other conditions.

Answer 22

BONDS

Question 23

the value of a bond is the present worth of all future amounts that
are expected to be received through ownership of the bond.

Answer 23

Bond Value

Question 24

the decrease in the value of a physical property with the passage of time.

Answer 24

DEPRECIATION

Question 25

TYPES OF DEPRECIATION

Answer 25

Physical Depn
Functional Depn

Question 26

A DEP’N method assumes that the loss in the value is
directly proportional to the age of the equipment or asset.

Answer 26

Straight line method

Question 27

(Dep’n) in this method, it is assumed that a sinking fund is established in which funds will accumulate for replacement purposes.

Answer 27

Sinking Fund Method

Question 28

(Dep’n) in this method, it is assumed that the annual cost of depreciation is a fixed percentage of the book value at the beginning of the year. This method is also called the constant percentage method or the Matheson Formula.

Answer 28

Declining Balance Method

Question 29

this method assumes that the total depreciation that has taken place is directly proportional to the quantity of output of the property up to that time.

Answer 29

Service Output Method

Question 30

_______ is the reduction of the value of a certain natural resource such as mines, oil, quarries, etc. due to the gradual extraction of its contents.

Answer 30

Depletion Cost

Question 31

this is used in situations where the cost of two or more alternatives may be affected by a common variable.

Answer 31

Break-even Analysis

Question 32

is the value of the variable for which the costs of the alternatives will be equal.

Answer 32

note: EQUAL

Break Even Point

Question 33

this method is a measure of the effectiveness of an investment of capital.

Answer 33

RATE OF RETURN (ROR) METHOD

Question 34

Sales volume at which the business will be able to pay exactly the desired rate of dvidend

Answer 34

Unhealthy point