– The present value of cash to be
Engineering Economy
Module 5 – Continuation of Money – Time and
Equivalence
LEARNING
OBJECTIVES
After studying this module, you should be able to
compute:
– The future value of an investment
made today
– The present value of cash to be
received at some future date
– The return on an investment
– The number of periods that equates
a present value and a future value
given an interest rate
• Be able to solve time value of money
problems using:
– Formulas
TOPIC
OUTLINE
Perpetuity
OVERVIEW
Module 1 key concepts and skills
• Be able to compute:
– The future value of an investment
made today
received at some future date
– The return on an investment
– The number of periods that equates
a present value and a future value
given an interest rate
• Be able to solve time value of money
problems using:
– Formulas
PERPETUITY
Perpetuity
Perpetuity – a type of annuity in which payments continue
indefinitely.
A
P=
i
Where:
P = value or sum of money at present
A = series of periodic equal amount of payments
i = interest rate per interest period
SAMPLE PROBLEMS
Example 1: Find the present worth of perpetuity of P 5,200
payable monthly if the interest is 16% compounded
monthly.
Ans. P 390,000
Example 2: Find the present value of a perpetuity of P
15,000 payable semiannually if money is worth 8%
compounded quarterly.
Ans. P 371,287
Example 3: If money is worth 8%, determine the present
value of a perpetuity of P 1,000 payable annually with the 1 st
payment due at the end of 5 years.
Ans. P 9,187.87
Module 1 – Basics of Heat Transfer | Page 1 of 2
 Faculty, College of Engineering and Architecture

SUMMARY

Let us see if you can remember the main points

raised in this lesson. Below is a summary of these
points:

Perpetuity – a type of annuity in which payments continue

indefinitely.

A
P=
i
Where:
P = value or sum of money at present
A = series of periodic equal amount of payments
i = interest rate per interest period

REFERENCES

Hipolito Sta. Maria. Engineering Economy Third

Edition.

William G. Sullivan, Elin M. Wicks, C. Patrick

Koelling. Engineering Economy Sixteenth
Edition

Prepared by:

ENGR. MARK RENBEL V. PARAN

Module 1 – Basics of Heat Transfer | Page 2 of 2