Working Through Besavilla's Engineering Economics: A Practical Guide
The book you're looking for is by Juan M. Besavilla Jr., widely used in Philippine engineering programs. It covers the standard topics — compound interest, depreciation, break-even analysis, replacement studies, and capital budgeting. The full title is typically listed as Engineering Economics, and it's been the go-to reference text for decades because it's straightforward and problem-heavy. You'll find scanned copies floating around on file-sharing sites and student forums. I don't host or link to them directly, but if you search the full title plus the author's name along with "download" or "pdf," you'll turn up results. Just be aware that quality varies — some are blurry scans, some are missing pages, and a few have OCR errors that turn a clean number into something garbage. I've pulled apart a couple of those bad scans where a superscript 12 in an interest factor table came through as regular text, and it cost me twenty minutes of confusion before I spotted it. That said, the core content hasn't changed. Besavilla's notation and approaches are consistent across editions, so even an older scan works fine for learning the material. The 1999 and 2006 reprint versions are the most common ones circulating online.
How the Book Is Structured and What Actually Matters
It opens with basic interest computations — simple and compound — then moves into cash flow diagrams, equivalence, and the standard factor notation that everyone in the field uses: P/F, F/P, P/A, A/P, A/F, F/A. If you can't flip between those notations in your head without looking it up, you'll struggle later. The book drills this repetition throughout the first three chapters, which is by design. After the fundamentals, it covers:
- Depreciation methods (straight-line, sinking fund, declining balance, SYD, and MACRS in later editions)
- Tax considerations and after-tax analysis
- Inflation and present worth adjustments
- Replacement analysis — keeper versus challenger
- Break-even and production capacity analysis
- Project evaluation using NPV, IRR, and benefit-cost ratios
The problem sets at the end of each chapter are where most students actually learn. The worked examples are clear but deliberate — Besavilla shows every step, including the factor lookup. That slowness is intentional. You're expected to replicate it by hand before touching a calculator or spreadsheet. Here's something the book doesn't hammer home enough: the difference between manning (annual) and monthly compounding when the nominal rate is the same. I remember working through a problem set where the effective annual rate came out to 12.68% with monthly compounding at 12% nominal, versus exactly 12% with annual compounding. The numbers look close. On a timed exam, that gap is enough to make you pick the wrong answer choice and move on without noticing. Another thing beginners consistently miss is the timing assumption in annuity problems. Besavilla defaults to end-of-period cash flows unless stated otherwise, but replacement analysis problems sometimes mix mid-year salvage values with end-of-year operating costs. I ran into this once on a practice set where the challenger's salvage was stated at the midpoint of year 4, and I had to discount it back half a period using (1+i)^0.5 instead of treating it as a standard end-of-year flow. The book doesn't explicitly flag that pattern, so you figure it out the hard way.
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How to Actually Use This Book Effectively
Don't just read the examples. Close the book and redo the example from scratch with a different calculator or spreadsheet. If you can get the same answer without looking, you've absorbed it. If you can't, you haven't. For the factor notation stuff, build a quick reference table. I keep a one-page sheet with all six standard factors and their formulas: (F/P,i,n) = (1+i)^n, (P/F,i,n) = 1/(1+i)^n, (A/F,i,n) = i/[(1+i)^n - 1], and so on. When you're solving a complex multi-step problem under time pressure, reaching for a formula instead of reconstructing it from first principles saves you from arithmetic errors. It also cuts my problem-solving time down from roughly 8 minutes per multi-factor problem to about 3 minutes once I stop second-guessing myself. When you hit the depreciation chapters, focus especially on the difference between book value and market value. Besavilla presents them in parallel but doesn't always make clear that they serve different purposes — book value for tax and accounting, market value for replacement decisions. Confusing the two leads to wrong answers on replacement analysis problems, and it's a mistake I've seen repeat itself across multiple sections of students.
Limitations of the Book
It's not perfect. The treatment of inflation is somewhat dated — later editions added more on it, but the approach still feels old-school compared to what modern engineering economy courses cover. The spreadsheet integration is minimal, which matters less now since most people use Excel or Python for heavy lifting, but if you're preparing for a board exam that requires manual factor table lookups, the book is solid. Another gap: the book doesn't cover real options analysis or Monte Carlo simulation for risk assessment. If your program or work involves those, you'll need a supplement. Besavilla is excellent for the fundamentals and exam prep, but it won't prepare you for anything beyond standard deterministic cash flow analysis. Also worth noting: some of the example numbers are rounded in ways that can throw off precision-sensitive calculations. I've seen solutions where the final answer differs by a few centavos depending on whether you round at each intermediate step or carry full precision. For exam purposes this rarely matters, but in actual project work it can add up across a large cash flow stream.
Alternatives if Besavilla Doesn't Work for You
If you find the writing style too dense or the problem explanations too rushed, whitey Sullivan's Engineering Economy is the standard alternative. It's more verbose but covers the same ground with clearer derivations. For a quicker reference,Blank and Tarquin's text is also widely used and has slightly better organization on the capital budgeting chapters. But for the Philippine licensing exam specifically, Besavilla remains the most aligned with the question style and difficulty level. That's probably why it stays in circulation despite its age. The problems mirror what actually shows up on the board exam, and the solution approaches match what graders expect to see. Download the PDF, work through at least the first five chapters cover to cover, and do every problem in the chapter sets before moving on. That's the part that actually works. Everything else is just logistics.
