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Time value of money and
assets
Dr. K. Shahzad Baig
Memorial University of Newfoundland (MUN) Canada
Time Value of Money
Money has a time value because it can earn more money over time
(earning power).
Money has a time value because its purchasing power changes over time
(inflation).
Time value of money is measured in terms of interest rate.
Interest is the cost of money—a cost to the borrower and an earning to
𝑃𝑉 =
𝐹𝑉
(1 + 𝑖) 𝑛
PV = Present value
FV = Future value
i= Discount rate
N = number of period untill FV is received
As time changes the value of money invested on any project also change
Assets are items that people, companies, or
even a country owns or controls.
Assets are the economic resources of a company.
A resource with economic value provide
future benefit.
Cost Analysis: Assets
Assets are divided into 2 groups:
Tangible
Intangible
A tangible asset is an asset that has a physical form
Following books were used in preparation of notes
 Blank, L., Tarquin. A. 2005. Engineering Economy. 6th Edition, McGraw-Hill.
 Eschenbach, T. G. 2003. Engineering Economy”, 2nd Edition, Oxford University Press
 Riggs, J. L., Bedworth, D. D., Randhawa, S. U. 1996. Engineering Economics”, 4th Edition, Tata McGraw-Hill.
 Riggs, J. L., West. T. M. 1986. Essentials of Engineering Economics”, 2nd Edition, McGraw-Hill.
 Peter, M. S., Timmerhaus, K. D. 1991. Plant Design and Economics for Chemical Engineers. 4th Edition, McGraw-
Hill.

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Fluctuation of money value with time

  • 1. Time value of money and assets Dr. K. Shahzad Baig Memorial University of Newfoundland (MUN) Canada
  • 2. Time Value of Money Money has a time value because it can earn more money over time (earning power). Money has a time value because its purchasing power changes over time (inflation). Time value of money is measured in terms of interest rate. Interest is the cost of money—a cost to the borrower and an earning to
  • 3. 𝑃𝑉 = 𝐹𝑉 (1 + 𝑖) 𝑛 PV = Present value FV = Future value i= Discount rate N = number of period untill FV is received As time changes the value of money invested on any project also change
  • 4. Assets are items that people, companies, or even a country owns or controls. Assets are the economic resources of a company. A resource with economic value provide future benefit. Cost Analysis: Assets Assets are divided into 2 groups: Tangible Intangible A tangible asset is an asset that has a physical form
  • 5.
  • 6. Following books were used in preparation of notes  Blank, L., Tarquin. A. 2005. Engineering Economy. 6th Edition, McGraw-Hill.  Eschenbach, T. G. 2003. Engineering Economy”, 2nd Edition, Oxford University Press  Riggs, J. L., Bedworth, D. D., Randhawa, S. U. 1996. Engineering Economics”, 4th Edition, Tata McGraw-Hill.  Riggs, J. L., West. T. M. 1986. Essentials of Engineering Economics”, 2nd Edition, McGraw-Hill.  Peter, M. S., Timmerhaus, K. D. 1991. Plant Design and Economics for Chemical Engineers. 4th Edition, McGraw- Hill.