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ENGINEERING ECONOMICS The sum of the outstanding bonds

multiplied to their current minus plus
The study of wealth, its value, creation the issued stock multiplied by its
and distribution. current market price.
Economics Stock and bond value

The money paid for the use of borrowed The difference between the value of a
capital property as islands possessed of its
Interest going elements and the value of the
property alone as it would stand at
completion of construction as a bare
The amount of interest earned by a unit assembly of physical part.
of principal for one unit of principal Going-concern value
is a unit of time.
Rate of Interest The element of value which inheres in
the mixed and favourable consideration
The discount on one unit of principal of customers arising from an established
for one unit of time. and well known and well conducted
Rate of Discount business.
Good-will business
A series of equal payment at equal
period of time. Consists of cost of the physical factors
Annuity and the intangible factors.
Total fair value
The annuity wherein the first payment is
made at the end of the period The second hand value or it is the sum
Ordinary Annuity of money which the machines bring when
sold to some other company or second
The annuity wherein the first payment hand dealer.
does not begin until several periods Salvage value
later.
Deferred Annuity The value considered when the
replacement of a piece of equipment
The price a willing buyer will pay to a contemplated. The value which is
willing seller for the stocks. equivalent to the first cost when bought
Market value from a second hand dealer.
In-place value
The worth of the property which is equal
to the original cost amount which has It is the present worth of its probable
been charged to depreciation. future net earnings.
Book value Earning value

The value assigned to the property for
purposes of establishing rate.
Rate base value
The sum of all cost incurred by an
investor of a project up to the time
that the project is accepted by those
who will promote it.
Development cost
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A written contract by a debtor to pay

The sum of all the costs necessary to final redemption value on indicated date
prepare a construction project for or maturity date and to pay a certain
operations. sum periodically.
Construction cost Bond

The annual charged that is made, during A bond that contain clauses permitting
their period of useful life for the repayment before maturity.
services rendered by the investment in Callable bond
buildings, machinery and equipments in
producing the product. Refers to anything of value owned by an
Depreciation cost enterprise.
Assets
The annual charged that is made for the
maintenance of investment in wasting The claim of anyone to ownership.
asset such as mines, oil, gas, wells. Equity
Depletion cost
The equity of the person who normally
The cost which has already occurred possesses the asset.
although may not have recognized as such Ownership
or the amount which has been spent or
capital invested which for some reasons The claim other than the owners upon the
cannot be retrieved. assets.
Sunk cost Liabilities

Are those which will exist unaltered It sometimes denotes ownership.

whether or not a given chance operation Proprietorship
is adopted.
Fixed costs
An asset which will not be converted
Are those which arise as the result of a into cash, or sold, or be converted into
change in operations or policy? saleable form during the coming
Differential cost accounting period, such as building,
land, machineries.
The addition cost of producing one more Fixed Asset
unit.
Marginal cost The imaginary cost representing what
will not be received if a particular
Refers to the direct material cost plus strategy is rejected.
direct labor cost. Opportunity Cost
Prime cost
It is a one-time credit against income
An intangible item of value arising from taxes.
the exclusive right of a company to Tax Credit
provide a specific product.
Franchise value