LOPEZ, RUTH D.

BSCE 2B
ASSIGNMENT NO.1
1. Explain the basic principles in your own words.
Below are the 7 basic principles with definitions and examples.

 Develop the alternatives

After the problem has been identified, the next step is to develop the alternatives.
These alternatives are the choices that are helpful or useful in making a decision.
Alternatives can be two or more depending on the availability of your choice. Like for
instance, when buying an electronic digital theodolite used for surveying applications.
Alternatives are Pentax, Prexiso, and Stonex.

 Focus on the Differences

Discernibly, only the differences in the alternatives are essential in making decisions
while those common results of alternatives will be ignored in the process of making
decisions and comparison. For example (based on the example of Principle 1) when
buying an electronic digital theodolite, the buyer will take into consideration those
specifications of the different alternatives such as its price, weight, voltage, telescope
magnification, angle measuring, and raster diameter.
 Use a consistent viewpoint
The future outcomes of the alternatives must be perpetually expounded from a
defined perspective. In other words, the perspective or viewpoint of a decision should
be first defined and used it for analysis and comparison of alternatives. Such as in buying
electronic digital theodolite, the perspective of the decision-maker, usually the owner,
would normally be used.

 Use a common unit of measure

In order to analyze as many of the prospective outcomes as possible, it is great to
use a common unit of measurement because it will make easier the analysis and
comparison of alternatives. Like in buying an electronic digital theodolite, specifications
of Pentax, Prexiso, and Stonex for its price is Philippine peso, weight is in kilogram,
voltage is volt.

 Consider all relevant criteria

Choosing a best or preferred alternative requires the use of numerous criteria.
Example is purchasing a digital theodolite. Another criterion to be considered in
purchasing is its token price, the resale value after 2 years, and price.

 Make risk and uncertainty explicit

Imperil and uncertainty are innate in estimating the future outcomes of the
alternatives and must be included in the analysis and comparison. Performing the
analysis of alternatives involves projecting the consequences associated with each
alternative. Furthermore, the impact of outcomes of any action is vague. For instance, in
buying theodolite, specifications like spare parts availability and price for each
alternative are also considered.
  Revisit your decisions
In decision making, the unwanted outcomes cannot be avoided. That is why it is
better to understand and experience for good decision making. Thus, revisiting decisions
among alternatives will produce a great impact in decision making such as in the
example of buying electronic digital theodolite. Always consider the different aspects of
specifications to obtain desirable outcomes.

2. Explain the design process in engineering economics

 The engineering design process is a sequence of steps in which engineers conform to
propose a solution to a problem. Frequently, the solution requires designing an
engine or any product that perceives a certain premise or doing a definite task. The
first step in the engineering design process is recognizing a problem to be solved, in
this step, it is essential to recognize a solution with a vivid, distinct definition of the
problem. As an example, a group of engineering wants to plan, design, and construct
roads to ensure safe and efficient transportation might start by asking themselves
what is the need for this problem? Is it using the right materials in construction? By
performing this, the group can formulate a good problem and afterward can start
the design process with all the possible solutions on the problem. In this step,
creativity is highly entailed in order to generate new ideas that can solve the
problem. Road planning procedures must comply with the necessary requirement or
engineers must have a scheme before constructing and designing a road. After
conceiving alternative solutions to the design problem, analysis is the next step. In
this step, deciding which solution or alternative is best suited for implementation.
The Analysis is somehow the evaluation of proposed alternatives. Furthermore,
applying all the technical ideas to the proposed alternatives and deciding which
alternatives or solutions to carry out. After the evaluation of alternatives, the next
step is to finalize the design. Finalizing must be precisely communicated or else it
might lose much of its importance.

3. Identify the areas in which economic decisions can present questionable ethics.
 Civil engineering is a profession that designs, constructs, operates, and maintains
huge construction projects such as buildings, roads, dams, bridges, and tunnels. To
be a civil engineer, one must provide the protection of its constituent health, safety,
and welfare and must adhere to ethical conduct. On the other hand, others can also
present questionable ethics in various areas of economic decisions such as using
faulty, or erroneous data. For instance, working in construction and undertaking
complex calculations. The Engineer must be accurate and true to his/her data.
Another instance in construction is the budget and project resources. Engineers are
the one who manages the budget for a project. Thus, those unfaithful engineers who
only buy and used substandard material in the construction may threaten the life of
the public. It could also cause future building collapses and unexpected incidents.
Another example is to those engineers who accept financial aid or any legal
consideration from outside representative concerning the project which they are
liable. That is why engineers in their different fields and endeavors must possess the
utmost standards of integrity and virtuousness because they have a direct impact on
the life of the people.
4. Give 3 examples of economic equivalence.
 Suppose Aerlyzah has ₱3,100 and she wants to deposit it at the bank at 11% interest
compounded annually. What is the economic equivalence of her deposit 4 years
from now?
Solution:
Given: N=4 i=0.11 P=₱3,100 F=?
N
F=P(1+i¿ ¿
F=3,100(1+0.11¿ ¿ 4
F= ₱4706.02 ans.

 Regine wants to receive ₱30,000 next year from an investment account that offers
9% annual interest. How much Regine should deposit today?
Solution:
Given: N=1 i=0.09 F=₱30,000 P=?
N
F=P(1+i¿ ¿
30,000=P(1+0.09 ¿ ¿1
P=₱27522.94 ans.

 If Rhean deposits ₱5,450 today in her savings account that pays 10% interest
annually. How much would she acquire at the end of 6 years?
Solution:
Given: N=6 i=0.10 P=₱5,450 F=?
N
F=P(1+i¿ ¿
F=5,450(1+0.10 ¿ ¿6
F=₱9655.01 ans.

5. Give 2 examples of calculating simple interest.

 An employee at KCC Mall de Zamboanga borrows ₱20,000 on April 1 and must repay
a total of ₱20,500 exactly 1 year later. Calculate the amount of interest and the
interest rate compensated.
Solution:
Amount to be paid=₱20,000
Original Amount=₱20,500
Interest=Amount to be paid-Original amount=₱20,500-₱20000=₱500
interest incurred per unit time
Interest Rate(%)= x 100
principal
500
Interest Rate(%)= x 100=2.5 % 1 year ans.
20000

 Mega Corporation plans to borrow ₱50,000 from a bank for 1 year at 10% interest
for new equipment. Calculate the total amount due after 1 year and the interest.
Solution:
Original (principal) amount=₱50,000
 Interest rate=10% annual
Interest=50,000x0.10x1=₱5,000
Total due amount after 1 year=₱50,000+₱5,000=₱55,000 ans.

6. Give 2 examples of calculating compound interest.

 How much money would Grace have to deposit now at 8% yearly interest
compounded monthly to have ₱18,100 in the account after 3 years?
Solution:
Given:
FV=18,100 r=0.08 n=12 t=3 P=?
r nt
FV=P(1+ ¿ ¿
n
0.08 12 (3)
18,100=P(1+ ¿¿
12
18,100=P(1.270237052)
P=₱14249.3088 ans.
Grace would need to deposit ₱10068.16 to have ₱18,100 in 3years.

 Pat deposit ₱7,500 into an account paying 10% annual interest compounded
monthly, how much money will be in the account after 9 years?
Solution:
Given: P=7,500 r=0.10 n=12 t=9 FV=?
r nt
FV=P(1+ ¿ ¿
n
0.10 12 (9 )
FV=7,500(1+ ¿¿
12
FV=7,500(2.450447605)
FV=18378.36 ans.