The most important concept in engineering economy that explains the change of money over time is

Expert Solution

The time value of money describes the change in the amount of money over time for funds that are invested. Engineering economy implies formulating, estimating and evaluating the expected economic outcomes of substitutes designed to accomplish a defined purpose.
The time value of money is the most major notion in engineering economy. The time value of money (TVM) is the concept that money we have now is more valueable than the identical sum in the future due to its possible earning capacity.
TVM is also called as present discounted value. The time value of money takes out from the idea that rational investors prefer to receive money today rather than the same amount of money in the future.
The formula for computing time value of money suggests the payment now, the future value, the interest rate and the time frame.

FV=PV*[1+(i/n)] ᴧ (n*t)

here,
FV = Future value of money,
PV= Present Value of money,
i=interest rate,
n= number of compounding periods per year.

Rahul Sunny answered 2 years ago

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