Scribd
Upload
59 views

2023sem1 Eecon Notes Simple Interest

The document discusses engineering economics and different types of interest. It covers simple interest, compound interest, continuous compounding, and discounting cash flows. Simple interest is interest earned on the principal alone over a given time period, usually counted in days, months, or years. Compound interest is interest earned on both the principal and previously accumulated interest. Continuous compounding involves compounding interest continuously over short intervals of time. Discounting cash flows uses present value to evaluate alternatives that have costs and benefits occurring at different points in time.

Uploaded by

vfroxas.mvbuilders
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
59 views

2023sem1 Eecon Notes Simple Interest

The document discusses engineering economics and different types of interest. It covers simple interest, compound interest, continuous compounding, and discounting cash flows. Simple interest is interest earned on the principal alone over a given time period, usually counted in days, months, or years. Compound interest is interest earned on both the principal and previously accumulated interest. Continuous compounding involves compounding interest continuously over short intervals of time. Discounting cash flows uses present value to evaluate alternatives that have costs and benefits occurring at different points in time.

Uploaded by

vfroxas.mvbuilders
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 13

ENGINEERING

ECONOMICS

ENGR. NADINE ALEX C. BRAVO, REE, RME


01 03
CHAPTER 1 simple interest rates of
interest
Money and
interest
02 04
compound continuous
interest compounding
of interest
05 06
CHAPTER 1 discount cash flow
diagram
Money and
interest
Engineering economics
CAN BE DEFINED AS THE SCIENCE THAT DEALS
WITH TECHNIQUES OF QUANTITATIVE ANALYSIS
USEFUL FOR SELECTING A PREFERABLE
ALTERNATIVE FROM SEVERAL TECHNICALLY
VIABLE ONES.
Engineering DECISION-MAKING
ENGINEERING DECISIONS FREQUENTLY INVOLVE EVALUATING
TRADEOFFS AMONG COSTS AND BENEFITS THAT OCCUR AT DIFFERENT
TIMES. A TYPICAL SITUATION IS WHEN WE INVEST ON A PROJECT TODAY
IN ORDER TO OBTAIN BENEFITS FROM THE PROJECT IN THE FUTURE.
MONEY IS USUALLY
DEFINED AS ANY
ARTICLE OR SUBSTANCE
USED AS A MEDIUM OF
EXCHANGE, MEANS OF
PAYMENT OR MEASURE
OF WEALTH.
HOWEVER, WHEN INVESTED IN A
BUSINESS OR DEPOSITED IN A
BANK, EVERYONE IS EXPECTING
OF AN INCOME CALLED INTEREST.
Es person e ea
01.
SIMPLE
INTEREST
THE INTEREST EARNED BY THE PRINCIPAL
ALONE OVER A GIVEN PERIOD OF TIME
USUALLY COUNTED IN NUMBER OF DAYS,
MONTHS, OR IN YEARS.
SIMPLE INTEREST

𝑰 = 𝑷𝒊𝒏
𝑭=𝑷+𝑰

ORDINARY SIMPLE INTEREST EXACT SIMPLE INTEREST


Basis: 360 days/year Basis: 365 days/year
30 days/month 366 days/leap year
12months/year
A man deposited P5,000 in a bank at a rate of
10% per annum for 10 months and 25 days.
Find the ordinary simple interest and the
accumulated amount.

Problem 1
A man deposited P5,000 in a bank at a rate of
12% per annum from January 10, 1999 to
November 18, 1999. Find the exact simple
interest.

Problem 2
1. Determine the exact simple interest on
5050 invested for period from January 21,
1999 to March 2, 2000, if the rate of
interest is 18%.

Problem 3
1. Donald buys a VR console from a merchant
who ask 1450 at the end of 60 days. Donald
wishes to pay immediately and the
merchant offers to compute the cash price
on the assumption that money is worth 8%
simple interest. What is the cash price?

Problem 4

You might also like