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SET A

a.) SCIENCE, a term derived from Latin word scientia, is a systematized body
of knowledge based on facts and events of life arranged according to order. It
is a system of gaining knowledge based on a scientific method which has the
following steps: unbiased observations, formulation of hypothesis, gathering
of data, systematic experimentation, analysis of data and conclusion. It aims
to give better understanding of current phenomena and a better ability to
infer future events. It expresses general truths and principles to explain how
things work.
b.)ENGINEERING is an applied science. It aims to solve problems to improve
the status quo. It can also be defined as the optimal conversion of the natural
resources to products that will make for optimum and safe utilizations of
humans. It solves problems not just by explaining but by actually designing
and manufacturing products, engines and devices which will last for a long
time and under a specification of safety.
c.) PRESENT ECONOMY PROBLEMS
There are many cases in engineering economy
studies where interest is not a factor, these studies are frequently
called present economy problems. Such studies usually involve the
selection between alternative designs, materials, or methods.
d.)RATE OF RETURN (ROR) METHOD
The rate of return on the capital invested is given
by the formula,

Rate of return is a measure of effectiveness of an investment


of capital. It is a financial efficiency. When this method is used, it is
necessary to decide whether the computed rate of return is sufficient to
justify the investment. The advantage of this method is that it is easily
understood by management and investors. The application of the rate of
return method is controlled by the following conditions: a single
investment of capital at the beginning of the first year of the project life
and identical revenue and cost data for each year. The capital invested is
the total amount of capital investment required to finance the project,
whether equity or borrowed.
e.) PRESENT WORTH (PW) METHOD
This pattern for economy studies is based on the concept of present
worth. If the present worth of the net cash flows is equal to, or greater

than zero, the project is justified economically. The present worth method
is flexible and can be used for any type of economy study. It is used
extensively in making economy studies in the public works field, where
long-lived structures are involved.

SET B
f.) SCIENCE, a term derived from Latin word scientia, is a systematized body
of knowledge based on facts and events of life arranged according to order. It
is a system of gaining knowledge based on a scientific method which has the
following steps: unbiased observations, formulation of hypothesis, gathering
of data, systematic experimentation, analysis of data and conclusion. It aims
to give better understanding of current phenomena and a better ability to
infer future events. It expresses general truths and principles to explain how
things work.
g.)ENGINEERING is an applied science. It aims to solve problems to improve
the status quo. It can also be defined as the optimal conversion of the natural
resources to products that will make for optimum and safe utilizations of
humans. It solves problems not just by explaining but by actually designing
and manufacturing products, engines and devices which will last for a long
time and under a specification of safety.
h.)ANNUAL WORTH. In this method, interest on the original investment
(sometimes called minimum required profit) is included as the cost. If the
excess of annual cash inflows over annual cash out flows is not less than zero
the proposed investment is justified is valid. This method is covered by the
same limitations as the rate of return pattern a single initial investment of
capital and uniform revenue and cost throughout the life of investment.
i.) FUTURE WORTH. The future worth method for economy studies is exactly
comparable to the present worth method except that all cash inflows and
outflows are compounded forward to a reference point in time called the
future. If the future worth of the net cash flows is equal to, or greater than,
zero, the project is justified economically.
j.) PAYBACK PERIOD. The payback period is commonly defined as the length of
time required to recover the first cost of an investment from the net cash flow
produced by that investment for an interest rate of zero
Investment salvage value
Payout period (years) =
Net annual cash flow

h.) ECONOMICS is the social science that deals with the production, distribution,
and consumption of goods and services and with the theory and management of
economies or economic systems. It is also the theories, principles,
and models that deal with how the market process works. It attempts to explain
how wealth is created and distributed in communities, how
people allocate resources that are scarce and have many alternative uses, and
other such matters that arise in dealing with human wants and their satisfaction.