ENGINEERING ECONOMY Fifth Edition Mc

Blank and Tarquin Graw

Hill

Terminology and Symbols

Blank & Tarquin: 5th Edition. Ch.

1 Authored by: Dr. Don Smith,
Texas A&M University. 3

Terminology and Symbols

• F = value or amount of money at some

future time.
• Also, F is called future worth (FW) and
future value (FV); dollars

Blank & Tarquin: 5th Edition. Ch. 1

Authored by: Dr. Don Smith, Texas A&M
4 University.

1
Terminology and Symbols

• A = series of consecutive, equal,

end-of-period amounts of money.
•Also, A is called the annual worth (AW) and
equivalent uniform annual worth (EUAW);
dollars per year, dollars per month
• n = number of interest periods; years,
months, days

Blank & Tarquin: 5th Edition. Ch. 1

Authored by: Dr. Don Smith, Texas A&M
5 University.

Terminology and Symbols

• i = interest rate or rate of return per

time period; percent per year, percent per
month

• t = time, stated in periods; years,

months, days, etc

Blank & Tarquin: 5th Edition. Ch. 1

Authored by: Dr. Don Smith, Texas A&M
6 University.

2
P and F

• The symbols P and F represent one-time

occurrences:
$F
• Specifically:

0 1 2 … … n-1 n
t=n

$P

Blank & Tarquin: 5th Edition. Ch. 1

Authored by: Dr. Don Smith, Texas A&M
7 University.

P and F:

• It should be clear that a present value P

represents a single sum of money at some
time prior to a future value F
•This is an important basic point to
remember

Blank & Tarquin: 5th Edition. Ch. 1

Authored by: Dr. Don Smith, Texas A&M
8 University.

3
Annual Amounts

• It is important to note that the symbol A

always represents a uniform amount (i.e.,
the same amount each period) that
extends through consecutive interest
periods.

Blank & Tarquin: 5th Edition. Ch. 1

Authored by: Dr. Don Smith, Texas A&M
9 University.

Annual Amounts

• Cash Flow diagram for annual amounts

might look like the following:
$A $A $A $A $A

…………
0 1 2 3 .. N-1 n

A = equal, end of period cash flow amounts

Blank & Tarquin: 5th Edition. Ch. 1

Authored by: Dr. Don Smith, Texas A&M
10 University.

4
Interest Rate – i% per period

• The interest rate i is assumed to be a

compound rate, unless specifically stated
as “simple interest”

•The rate i is expressed in percent per

interest period; for example, 12% per
year.

Blank & Tarquin: 5th Edition. Ch. 1

Authored by: Dr. Don Smith, Texas A&M
11 University.

Terminology and Symbols

• For many engineering economy

problems:
• Involve the dimension of time
• At least 4 of the symbols { P, F, A, i%
and n }
• At least 3 of 4 are either estimated or
assumed to be known with certainty.

Blank & Tarquin: 5th Edition. Ch. 1

Authored by: Dr. Don Smith, Texas A&M
12 University.

5
ENGINEERING ECONOMY Fifth Edition Mc
Blank and Tarquin Graw
Hill

CHAPTER II Section 1

F/P and P/F Factors

Blank & Tarquin: 5-th Edition Ch.

1 Authored by: Dr. Don Smith
4/15/2020 Texas A&M University 13

2.1 Basic Derivations: F/P factor

F/P Factor Untuk mencari F

diketahui P F n

Untuk mencari F diketahui P

………….
N

Waktu yang akan datang

P0

Blank & Tarquin: 5-th Edition Ch. 1

Authored by: Dr. Don Smith Texas A&M
4/15/2020 University 14

6
2.1 Penurunan perhitungan: F/P factor

F1
= P(1+i)
F2
= F1(1+i)…..but:
F2
= P(1+i)(1+i) = P(1+i)2
F3
=F2(1+i) =P(1+i)2 (1+i)
= P(1+i)3
In general:
FN = P(1+i)n
FN = P(F/P,i%,n)
Blank & Tarquin: 5-th Edition Ch. 1
Authored by: Dr. Don Smith Texas A&M
4/15/2020 University 15

2.1 Present Worth Factor dari F/P

FN = P(1+i)n
Sehingga P dalam FN
P = F{1/ (1+i)n} = F(1+i)-n
Jadi :
P = F(P/F,i%,n)
dimana
(P/F,i%,n) = (1+i)-n
Blank & Tarquin: 5-th Edition Ch. 1
Authored by: Dr. Don Smith Texas A&M
4/15/2020 University 16

7
2.1 P/F factor

Menghitung ulang nilai sekarang

Fn

………….
N
P/F factor membawa kembali nilai di
masa depan yang di ekivalensikan
P terhadap nilai masa lalu

Blank & Tarquin: 5-th Edition Ch. 1

Authored by: Dr. Don Smith Texas A&M
4/15/2020 University 17

2.2 Contoh F/P Analisis

Contoh: P= $1,000;n=3;i=10%
What is the future value, F?
F = ??

0 1 2 3
P=$1,000
i=10%/year

F3 = $1,000[F/P,10%,3] = $1,000[1.10]3
= $1,000[1.3310] = $1,331.00
Blank & Tarquin: 5-th Edition Ch. 1
Authored by: Dr. Don Smith Texas A&M
4/15/2020 University 18

8
2.2 Contoh – P/F Analisis

Asumsikan F = $100,000, 9 tahun dari

sekarang. Berapa nilai uang sekarang jika i
=15%? F9 = $100,000

i = 15%/tahun

0 1 2 3 ………… 8 9

P= ??
P0 = $100,000(P/F, 15%,9) = $100,000(1/(1.15) 9)
= $100,000(0.1111) = $11,110 at time t = 0
Blank & Tarquin: 5-th Edition Ch. 1
Authored by: Dr. Don Smith Texas A&M
4/15/2020 University 19