Hi sir! I am preparing for my CIE Exam. Your video tutorial helped me a lot to understand about Capitalized Cost. Sobrang linaw ng explanation po, feeling ko ma peperfect ko po tong part na to hehe. Godbless po Engineer Miller! 🙏
Hi Sir do you still reply? I just want to ask if what formula should i use for this problem "A Mechanical Engineer is preparing a capitalized cost for pumping service P 3,000,000 to buy a tank needed now. After 10 years another P 3,000,000 tank is needed, at that time P 350,000 for additional pumping installations, P 40,000 for operations and maintenance for the first year and increased by P 5000 for succeeding nine years, no salvage value at that time, using 8% interest rate, the amount of capitalized cost is?"
Hello! You'll need to draw the cash flow diagram for this then solve it from there. Note that the first 3M is already a capital; the 3M + 350K in period 10 needs to be projected back to period zero by single payment formula; the 40K is a deferred annuity so you need to project it back to period zero as well; and the 5K is a deferred arithmetic gradient from period 11 to 20, project it also to the period zero. Salvage value is Zero.
Nope, perpetuity iscalculated on an end of the period basis. So since these payments were calculated on the beginning of the period, so we need to add the OM of the first period which starts at period 0, as it will not be e Included in the perpetuity calculation.
@@Engr.miller like for example, on the 3rd problem. there are 2 perpetuities for the 2M and 16M. in that case you didnt add any initial payment like additional 2M and 16M
Hello, thanks again for your questions! In perpetuity, the interest of the initial cost is used to pay the perpetual payments per period. This means that the anual payments are made every end of the period. We didn't had to add any initial cost to the perpetuity in the other problems because their first payment landed on the end of the first term. But for the last problem, the perpetuity cash flow diagram shows that the first payment (meaning first OM as seen in time 36:03 of the video) was considered to be made at period 0, or the beginning of the first period. This will not be included in the perpetuity calculation if we use the formula and not add it in.
Hi po, I want to ask po what to use na formula for this question “Calculate the capitalized cost of a project that has an initial cost of P5,000,000 and an additional cost of P500,000 at the end of every 10 yrs. The annual operating costs will be P200,000 at the end of every year for the first 4 years and P300,000 thereafter. In addition, there is expected to be recurring major rework cost of P300,000 every 13 yrs. Assume i =12%.”
Hello, salamat sa tanong. You need to draw the cash flow diagram and solve from there. Hindi mo po masosolve ito kung wala kang cash flow diagram at hindi pweding formula lang.
Hello po, thank you for watching. Regaeding po sa OM, yun po kasing 2.5M yearly ay isang deffered annuity kaya ganyan po naging itsura niya sa cash flow diagram. Nagkaroon ng "a" at "b" para madistinguish yung amount niya at a certain period. Yung period "a" ay present amount niya sa 5th year, at yung "b" ay present amount niya sa period 0. You can watch my video po nang deffered annuity for more info. Salamat po
Well, the third condition is if there is an included perpetual operation and mentainance. So we have to calculate the equivalent present amount of all these expenses and add them to the other expenses to form the total capitalized cost. In this case, the capitalized cost is the total of all the: 1. First cost; 2. Maintenance and Operating Cost during its operation period; and the 3. Reconstruction cost
The idea of capitalized cost is to calculate all the possible expenses that the asset will incur and then convert them all to a single present amount. This includes OM.
Sir medyo hindi ko po maintindihan yung sa last example sa last part po. Bakit po future formula yung ginamit nung nag deferred annuity po? Yung buong Psub2.5(a) at Psub2.5(b) po hindi ko po kasi maintindihan.. Yung sa Psub1.5 naka present form naman po yung formula na ginamit nyo.
Yung Psub2.5 kinuha muna yung present worth down to the 6th year, then may natitira pang 5 years. Since walang annuity sa 5 years na yon, i coconsider mo sya as single payment where in gagamitin mo yung formula P=F(1+i)^-n, where yung magiging itsura ng formula is 25,949,145.1(1+.05)^-5. In short, hinanap mo lang yung present worth of single payment compound interest nung value na nakuha mo sa annuity ng 2.5m down to the 6th year. Sorry kung medyo magulo explanation😅
Hello po, your answer may still be acceptable. Mas maganda po kasi istore mo sa iyong calcu yung value ng i na nacompute which is 0.16985856 isntead of using yung naround-off na 0.1699 para mas accurate. hehe.
Hi sir! I am preparing for my CIE Exam. Your video tutorial helped me a lot to understand about Capitalized Cost. Sobrang linaw ng explanation po, feeling ko ma peperfect ko po tong part na to hehe. Godbless po Engineer Miller! 🙏
Salamat...:)
SOLID mas maganda tlga ung conventional way pag solve kesa sa formula mas maiintindhan mo ung concept salamat engineer!
Sir, maraming salamat po. Malaking tulong po samin ang mga ginagawang mong video, lalo mg samin na mag te take ng board next april.
New subscriber hehe galing niyo po mag explain sana po meron din sa ibang engineering subs maraming salamat po.
galing niyo po. thank you po
Thank you! 😅
Hi Sir do you still reply? I just want to ask if what formula should i use for this problem "A Mechanical Engineer is preparing a capitalized cost for pumping service P 3,000,000 to buy a tank needed now. After 10 years another P 3,000,000 tank is needed, at that time P 350,000 for additional pumping installations, P 40,000 for operations and maintenance for the first year and increased by P 5000 for succeeding nine years, no salvage value at that time, using 8% interest rate, the amount of capitalized cost is?"
Hello! You'll need to draw the cash flow diagram for this then solve it from there. Note that the first 3M is already a capital; the 3M + 350K in period 10 needs to be projected back to period zero by single payment formula; the 40K is a deferred annuity so you need to project it back to period zero as well; and the 5K is a deferred arithmetic gradient from period 11 to 20, project it also to the period zero. Salvage value is Zero.
Salamaat po Lakas mo po!!!
salamar sir❤
Sir Pa request ng fluid mechanics na topic... Maganda po kayo mag explain..
For CC3 in the last problem, why is there a need to put an initial OM in addition to the perpetuity?
Doesnt the perpetuity already include the first 20 years?
Nope, perpetuity iscalculated on an end of the period basis. So since these payments were calculated on the beginning of the period, so we need to add the OM of the first period which starts at period 0, as it will not be e
Included in the perpetuity calculation.
@@Engr.miller how come we dont do this in other perpetuity problems like the previous ones you discussed?
@@Engr.miller like for example, on the 3rd problem. there are 2 perpetuities for the 2M and 16M. in that case you didnt add any initial payment like additional 2M and 16M
Hello, thanks again for your questions!
In perpetuity, the interest of the initial cost is used to pay the perpetual payments per period. This means that the anual payments are made every end of the period. We didn't had to add any initial cost to the perpetuity in the other problems because their first payment landed on the end of the first term. But for the last problem, the perpetuity cash flow diagram shows that the first payment (meaning first OM as seen in time 36:03 of the video) was considered to be made at period 0, or the beginning of the first period. This will not be included in the perpetuity calculation if we use the formula and not add it in.
Salamat po
Hi po, I want to ask po what to use na formula for this question “Calculate the capitalized cost of a project that has an initial cost of P5,000,000 and an additional cost of P500,000 at the end of every 10 yrs. The annual operating costs will be P200,000 at the end of every year for the first 4 years and P300,000 thereafter. In addition, there is expected to be recurring major rework cost of P300,000 every 13
yrs. Assume i =12%.”
Hello, salamat sa tanong.
You need to draw the cash flow diagram and solve from there. Hindi mo po masosolve ito kung wala kang cash flow diagram at hindi pweding formula lang.
Merry Christmas and a prosperous New Year SIR ENGR.! ... Ano po pala ang ginagamit niyo sir sa paggawa ng mga presentations mo po 😊?
Hello po, Merry Christmas din!!! Power point po yan lahat, tapos gumamit na ako nang OBS para sa recording.
hello engr., sa last prob., bakit yung pagkuha ng CC for OM is in-add pa ulit yung 26M along side perpetuity formula? thank you
same question po
Sir ask ako bat di na lang e add lahat ng OM sa last questions mo sir, nalilito ako po kase maintain cost siya tas ginawa mong 5 yrs. yung b
Hello po, thank you for watching.
Regaeding po sa OM, yun po kasing 2.5M yearly ay isang deffered annuity kaya ganyan po naging itsura niya sa cash flow diagram. Nagkaroon ng "a" at "b" para madistinguish yung amount niya at a certain period. Yung period "a" ay present amount niya sa 5th year, at yung "b" ay present amount niya sa period 0.
You can watch my video po nang deffered annuity for more info. Salamat po
@@Engr.millerThank you po sir nagets kona
nagpakahirap pa akong maghanap andito kalang pala.
Hehe, buti po nakita niyo!
tenkyu po
Thanks sa panonood!
Bakit po 2.8 million sagot sa problem 1. It should be only 2,536,363.63 lang
Tama naman po. 2.8M
Could someone please elaborate why is there a need to put an OM at the final equation
Are you asking about the inclusion of the OM in the equation of the 3rd condition?
@@Engr.miller yes
Well, the third condition is if there is an included perpetual operation and mentainance. So we have to calculate the equivalent present amount of all these expenses and add them to the other expenses to form the total capitalized cost. In this case, the capitalized cost is the total of all the: 1. First cost; 2. Maintenance and Operating Cost during its operation period; and the 3. Reconstruction cost
The idea of capitalized cost is to calculate all the possible expenses that the asset will incur and then convert them all to a single present amount. This includes OM.
Yung salvage value ng last problem
Hello po, is this a question po?
Sir medyo hindi ko po maintindihan yung sa last example sa last part po.
Bakit po future formula yung ginamit nung nag deferred annuity po?
Yung buong Psub2.5(a) at Psub2.5(b) po hindi ko po kasi maintindihan.. Yung sa Psub1.5 naka present form naman po yung formula na ginamit nyo.
Yung Psub2.5 kinuha muna yung present worth down to the 6th year, then may natitira pang 5 years. Since walang annuity sa 5 years na yon, i coconsider mo sya as single payment where in gagamitin mo yung formula P=F(1+i)^-n, where yung magiging itsura ng formula is 25,949,145.1(1+.05)^-5. In short, hinanap mo lang yung present worth of single payment compound interest nung value na nakuha mo sa annuity ng 2.5m down to the 6th year. Sorry kung medyo magulo explanation😅
English please
Sir Bakit 2560035.3148911125 instead of 2560537.90 Ang lumabas sa calcu ko? sa second problem using Yung sa Cashflow mo.
same
Nka round off po kase si sir. Kaya ganun po nakukuha niyo. Try niyo po ilagay yung equation sa baba ng RC-SV/(1+i)^n-1
Hello po, your answer may still be acceptable. Mas maganda po kasi istore mo sa iyong calcu yung value ng i na nacompute which is 0.16985856 isntead of using yung naround-off na 0.1699 para mas accurate. hehe.