CIVL202 Construction Engineering I Tutorial 10 T1Mon11:00 – 11:50 T2Wed09:00 – 09:50.

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CIVL202 Construction Engineering I Tutorial 10 T1Mon11:00 – 11:50 T2Wed09:00 – 09:50

Tutorial Outline The time value of money Formula samples

The time value of money If the money could be used in the process of production as capital, the money would have added value, namely the time of value. Deposited in a bank could be considered as a way of investment and the time value of money is the interest given by the bank.

The time value of money Additional motivations for demanding interest are to compensate for the risk of borrower default and the risk of inflation (as well as some other more technical factors).

Formula Assumption Inflation-free: no inflation in the period of time under consideration. Compound amount factor

Formula Uniform series compound amount factor Uniform series sinking fund factor

Formula Present Worth Present worth factor Present worth of F = Uniform series present worth factor