Tiêu đề Material - Engineering Economy II.docx ✅

PART 2: Equal Payment Method Annuity – A series of uniform payment for a lump sum of money In general, the formula for annual payment is: Uniform Series Factors of Equal Payment Methods  Uniform Series Compound Amount Factor (USCAF) – Term used for the ratio between the future value and the annuity. It is also the value of the Future value when the annuity is one.  Uniform Series Sinking Fund Factor (USSFF) – Or simply sinking fund factor (SFF), is the ratio between annuity and the future value. It is also the value of annual payment at future value of one.  Sinking Fund – are funds that are set aside to procure a capital or payment for the future.  Uniform Series Present Worth Factor (USPWF) – Term used for the ratio between the present value and the annuity. It is also the value of the Present value when the annuity is one.  Uniform Series Capital Recovery Factor (USCRF) – Or simply capital recovery (CRF), is the ratio between annuity and its present value. It’s the value of annual payment at present value of one.  Sinking Fund – are funds that are set aside to procure a capital or payment for the future. Types of Annuities  Ordinary Annuity – An annuity in which all the cash flows occur at the end of each period.  Annuity Due – An annuity in which all the cash flows occur at the beginning of each period.  Deferred Annuity – An annuity in which the periodic benefits payments do not start right at the end of the accumulation period but is deferred to some future date with M as the number of deferred periods.  For Deferred at the end of the period:  For Deferred at the end of the period:  Perpetuity - An annuity that continues forever or has no maturity. Thus, the future worth would be an infinite amount. There are two basic types of perpetuities namely level and growing perpetuities.  Level Perpetuity – Perpetuity in which the payments are constant rate from period to period.  Growing Perpetuity – Perpetuity in which cash flows grow at a constant rate, g, from period to period.
PART 3: Gradient Payments Gradient – A series of non-uniform payments. Arithmetic Gradient – Payment is increased/decreased by a value G in each period.  Annuity: When changing a gradient into a uniform payment (annuity), we use the ratio called uniform linear gradient series annual equivalent amount factor (ULGSAEAF).  Present Worth: The present worth (P) of cash flows with increasing or decreasing equal amounts (G) uses uniform linear gradient series present worth factor (ULGSPWF).  Future Worth: The future worth (F) of cash flows with increasing or decreasing equal amounts (G) uses uniform linear gradient series compound amount factor (ULGSCAF). Geometric Gradient – Payment is increased/decreased by a rate g in each period.  Present Worth: The present worth (P) of cash flows with increasing or decreasing equal amounts (G) uses uniform geometric gradient series present worth factor (UGGSPWF).  Future Worth: The future worth (F) of cash flows with increasing or decreasing equal amounts (G) uses uniform geometric gradient series compound amount factor (UGGSCAF). PART 4: Depreciation and Depreciation Methods Depreciation – An artificial expense that spread the purchase price of an asset or another property over a number of years For this section the equivalence of each letters notates the following: FC = First Cost, Face Value, or Total Cost SV = Salvage or Scrap Value L = Useful Life in years n = Number of Years d = Annual Depreciation D n = Accumulated Depreciation D = Total Depreciation BV n = Book Value METHOD 1: STRAIGHT LINE METHOD (SLM) or Fixed Installment Method  It assumes that a constant amount is depreciated each year over the useful life of the property. METHOD 2: SINKING FUND METHOD (SFM) or Depreciation/Redemption Fund Method
 A depreciation method wherein funds will accumulate for replacement purposes. Interest yielded on such securities is compounded or reinvested in each year. METHOD 3: DECLINING BALANCE METHOD (DBM) or Diminishing Balance Method or Written Down Value Method or Constant-Percentage Method or Matheson Formula  The annual cost of depreciation is the fixed percentage (1 − k) of the Book Value (BV) at the beginning of the year. METHOD 4: DOUBLE DECLINING BALANCE METHOD (DDBM)  Like declining balance method, the depreciation is charged on the opening written down value of the fixed asset. Like straight line method, a fixed rate of depreciation is charged in this method, but the rate used is twice the straight-line rate. METHOD 5: SUM-OF-YEARS’ DIGIT METHOD (SOYD)  An accelerated depreciation technique based on the assumption that tangible properties are usually productive when they are new, and their use decreases as they become old. Note: It is easier to count number from 1 to L, then arrange them in decreasing order. each value is the L-n+1 of each year, and the total is its SOYD. To find Rn, just add the numbers from the first year up to the current year n. METHOD 6: WORKING HOURS METHOD or Service Output Method.  Results in the cost basis allocated equally over the expected number of units produced during the period of tangible properties. METHOD 7: CONSTANT UNIT METHOD  Similar structure of formula with Working Hours Method but in terms of number of units instead of number of hours.