ENGINEERING ECONOMICS

1) P 500,000 was deposited 20.15 years ago at an interest rate of 7% sum payment at the end of 4 years. How much is this lump sum if
compounded semi-annually. How much is the sum now? (#22, Nov. the cost of money is 14% compounded quarterly? (#24, Nov. 1996)
1994) 15) If P 500,000 was deposited at a rate of 11.25% compounded
2) An engineer bought equipment for P 500,000. He spends an monthly, determine the compounded interest after 7 years and 9
additional amount of P 30,000 for installation and other expenses. months. (#25, Nov. 1996)
The estimate useful safe of the equipment is 10 years. The salvage 16) A company uses a type of truck which cost P 2M, with life of 3
value is x% of the first cost. Using the straight line method of years and a final salvage value of P 320,000. How much could the
depreciation, the book value at straight line method of depreciation, company afford to pay another type of truck for the same purpose,
the book value at the of 5 years will be P 291, 500. What is the whose life is 4 years with a final salvage value of P 400,000, if
value of x? (#23, Nov. 1994) money is worth 4%? (#23, May 1997)
3) A man inherited a regular endowment of P 100,000 every end of 3 17) Machine cost = $ 15,000; life = 8 years; salvage value = $ 3,000.
months for x years. However, he may choose to get a single lump What minimum cash return would the investor demand annually
sum of P 3, 702, 939. 80 at the end of 4 years. If the rate of interest from the operation of this machine if he desires interest annually at
was 14% compounded quarterly, what is the value of x? (#24, Nov. the rate of 8% on his investment and accumulates a capital
1994) replacement fund by investing annual deposits at 5%? (#24, May
4) How long (years) will it take the money to quadruple if it earns 7% 1997)
compounded semi-annually? (#13, May 1995) 18) A time deposit of P 110,000 for 31 days earns 890.39 on maturity
5) A man paid 10% down payment of P 200,000 for a house and lot date after deducting the 20% withholding tax on interest income.
and agreed to pay the balance of monthly installments for 5 years Find the rate of interest per annum. (#26, May 1997)
at an interest rate of 15% compounded monthly. What was the 19) An engineer bought equipment for P 500,000. Other expenses,
monthly installment in pesos? (#14, May 1995) including installation, amounted to P 30,000. At the end of its
6) An investor pays P 1,100,000 for a mine which will yield a net estimated useful life of 10 years, the salvage value will be 10% of
income of P 200,000 at the end of each year for 10 years and then the first cost. Using the straight line method of depreciation, what is
will become useless. He accumulates a replacement fund to the book value after 5 years? (#10, Nov. 1997)
recover his capital by annual investments at 4.5%. At what rate 20) What rate compounded quarterly is equivalent to 6% compounded
does he receive interest on his investment at the end of each year? semi-annually? (#6, May 1998)
(#15, May 1995) 21) Determine the breakeven point in terms of number of units
7) A manufacturer can produce a commodity at a cost of P 2 per unit. produced per month using the following data: (the costs are in
At a selling price of P 5 each consumers have been buying 4,000 pesos per unit) (#7, May 1998)
pieces a month for each price. P 1 increase in the price, 400 fewer Selling price per unit = 600 pesos
pieces will be sold each month. At what price apiece will the total Total monthly overhead expenses = 428,000 pesos
profit be maximized? (#10, Nov. 1995) Labor cost = 115 pesos
8) Find the present value in pesos, of perpetuity of P 15,000 payable Cost of materials = 76 pesos
semi-annually if money is worth 8% compounded quarterly. (#13, Other variable cost = 2.32 pesos
Nov. 1995) 22) The present value of an annuity of R pesos payable annually for 8
9) P 200,000 was deposited at an interest of 24% compounded semi- years, with the first payment at the end of 10 years, is P
annually. After how many years will the sum be P 621, 170? (#15, 187,481.25. Find the value of R if money is worth 5%. (#12, May
Nov. 1995) 1998)
10) A machine costing P 45,000 is estimated to have a salvage value of 23) A debt of x pesos, with interest rate of 7% compounded annually
P 4,350 when retired at the end of 6 years. Depreciation cost is will be retired at the end of 10 years through the accumulation
computed using a constant percentage of the declining book value. deposit in the sinking fund invested at 6% compounded semi-
What is the annual rate of depreciation in %? (#5, May 1996) annually. The deposit in the sinking fund every end of 6 months is P
11) P 200,000 was deposited on Jan. 1, 1988 at an interest rate of 24% 21,962.68. What is the value of x? (#14, Nov. 1998)
compounded semi-annually. How much would the sum on Jan. 1, 24) P 100,000 was placed in a time deposit which earned 9%
1993? (#12, May 1996) compounded quarterly, tax free. After how many years would it be
12) A service car whose cash price was P 540,000 was brought with a able to earn a total interest rate of P 50,000? (#24, Nov. 1998)
down payment of P 162,000 and monthly of P 10,874.29 for 5 25) A machine having a first cost of P 60,000 will be retired at the end
years. What was the rate of interest if compounded monthly? (#29, of 8 years. Depreciation cost is computed using a constant
May 1996) percentage of the declining book value. What is the total cost of
13) At 6%, find the capitalized cost of a bridge whose cost is P 200M depreciation, in pesos, up to the time the machine is retired if the
and life is 20 years, if the bridge must be partially rebuilt at a cost of annual rate of depreciation is 28.72%? (#25, Nov. 1998)
P 100M at the end of each 20 years. (#23, Nov. 1996) 26) The number of newspaper copies distributed is given by C=50t^2-
14) A man inherited regular endowment of P 100,000 every end of 3 200t+10,000 where t is in years. Find the minimum number of
months for 10 years. However, he may choose to get a single lump copies distributed from 1995 to 2002. (#7, May 1999)
 ENGINEERING ECONOMICS
27) The tag price of a certain commodity is for 100 days. If pain in 31 42) What is the present worth of perpetuity of P 10,000 annually if
days, there is a 3% discount. What is the simple interest paid? (#9, money is worth 10% compounded monthly? (#6, Nov. 2001)
May 1999) 43) A house and lot costing P 2M has bought at a down payment of P
28) A man paid 10% down payment of P 200,000 for a house and lot 500,000 and P 1M after 1 year. The remaining balance will be paid
and agreed to pay the balance on monthly installments for 60 at the end of the 3rd year. If the interest rate is 24% compounded
months at an interest rate of 15% compounded monthly. Determine semi-annually, what is the required payment? (#11, Nov. 2001)
the required monthly payment. (#10, May 1999) 44) The cost of producing a commodity consists of P 65 per unit for
29) The cost of producing an item is as follows: labor and material cost and P 25 per unit for other variable cost.
Labor cost = P 315 The fixed cost per month amounts to P 700,000. If the commodity is
Material cost per unit = P 100 sold at P 290 each, what is the break-even quantity? (#17, Nov.
Variable cost per unit =P3 2001)
Monthly overhead cost = P 461,600 45) A machine having a total first cost of P 100,000 has a salvage cost
If each unit is sold at P 995, how many units must of P 10,000 after 10 years. Determine the book value after 5 years
be produced each month to break even. (#11, May 1999) using the double declining balance method. (#15, May 2002)
30) To maintain its newly acquired equipment, the company needs P 46) A man deposits P 6,000 every end of three months for his
40,000 per year for the first five years and P 60,000 per year for the retirement. If the interest rate is 10% annually compounded
next five years. In addition, an amount of P 140,000 would also be quarterly, what lump sum value can he expect after 20 years? (#19,
needed at the end of the 5th and the 8th years. At 6%, what is the May 2002)
present worth of these costs? (#4, Nov. 1999) 47) A contractor can buy trucks for P 800,000 each, or rent them for P
31) Determine the capitalized cost of a project that cost P 324,000 with 1,200 per truck per day. The truck has a salvage value of P
an anticipated salvage value of P 50,000 pesos at the end of 4 100,000 at the end of its useful life of 5 years. The annual
years, if money is worth 8%. (#5, Nov. 1999) maintenance cost is P 20,000 per truck. Using the annual-cost
32) How long will it take for the money to quadruple itself if invested at method and 14% interest rate, determine the number of days per
20% compounded quarterly? (#1, ,May 2000) year that each truck must be used to warrant its purchase. Use
33) P 5,000 is deposited at the end of each year for 15 years into an sinking fund method of depreciation. (#20, Nov. 2002)
account earning 7.5% compounded continuously. Find the amount 48) What is the difference between the sums an annuity due and an
after 15 years. (#5, May 2000) ordinary annuity for the following data: (#21, Nov. 2002)
34) A machine costing P 480,000 has a life expectancy of 12 years with Periodic payment = P 14,000
a salvage value of 10% of the first cost. What is the book value Term = 16 years
after 5 years using the declining balance method? (#11, May 2000) Interest rate = 10% compounded quarterly
35) A certain copier machine cost P 150,000 with a trade-in value of P Payment interval = 3 months
15,000 after making 800,000 copies. Using the declining balance 49) At what interest rate, compounded quarterly, will an investment
methos, what is the book value when the machine had made double in 5 years? (#22, Nov. 2002)
300,000 copies? (#28, May 2000) 50) Cost of machine = 140,000 pesos; useful life = 8 years; salvage
36) P 1M was invested to an account earning 8% compounded value = 10,000 pesos. Determine the 4 th year depreciation using the
continuously. What is the amount after 20 years? (#14, Nov. 2000) double declining balance method, in pesos. (#18, May 2003)
37) A man made a year-end payment of P 100,000 to an account 51) Terms of sales: P 60,000 payable in 60 days or P 57,500 payable in
earning 8% annually for 10 years. How much is in the account after 15 days. Find the equivalent annual rate of simple interest if paid in
20 years? (#15, Nov. 2000) 60 days. (#19, May 2003)
38) The cost of producing a certain commodity consists of P 45 per unit 52) Find the present value, in pesos, of an annuity of P 20,000 payable
for labor and material cost P 15 per unit for other variable cost. The annually for 8 years, with the first payment at the end of 10 years, if
fixed cost per month amounts to P 450,000. If the commodity is money is worth 5%. (#20, May 2003)
sold at P 250 each, what is the break-even quantity? (#16, Nov. 53) A nominal annual rate of interest of 7%, compounded continuously,
2000) has an effective annual interest rate of: (#22, Nov. 2003)
39) Equipment having a first cost of P 450,000 has a life expectancy of 54) What is the difference between the sums of an annuity due and an
10 years with a final salvage value of P 80,000. Using the double ordinary annuity for the following data: (#23, Nov. 2003)
declining balance method, what is its book value after 6 years? (#7, Periodic payment = P 100,000
May 2001) Terms = 20 years
40) Find the effective rate on a nominal rate of 8.5% compounded Payment intervals = 1 year
continuously. (#8, May 2001) Interest rate = 12% compounded annually
41) Determine the equal payment series future worth factor of an 55) Equipment is bought at P 420,000 with an economic life of 6 years
annuity of P 15,000 per year for 25 years at 18% interest annually. and a salvage value of P 50,000. The first year depreciation is P
(#14, May 2001) 205,714. The cost of money is 12% per year. What method of
depreciation was used? (#24, Nov. 2003)
 ENGINEERING ECONOMICS
56) At t years from now, one investment plan generate profit at the rate 69) Determine the annual cost of a structure that requires P 15M to
of 50 + t^2 thousand pesos per year, while a second investment build with a salvage value of P 2M after 12 years, if interest rate is
plan will generate 200 + 5t thousand pesos per year. What is the 6%? (#20, May 2006)
net excess profit if you invest in the second plan instead of the first
plan up to time the two plans yield equal profits? (#13, May 2004)
57) An equipment costing P 200,000 has an estimate scrap value of P
25,000 at the end of its economic life of 10 years. Using the double
declining balance method of depreciation, what is its book value
after 8 years of service? (#21, May 2004)
58) A shoes factory has a production capacity of 9000 units per month.
The fixed and variable cost are as follows:
Fixed monthly operating cost = P 800,000
Material and labor cost = P 200 per unit
Selling price per unit = P 500
What is the profit per month if the factory has an efficiency of
80%? (#22 May 2004)
59) The present value of an annuity of R pesos payable annually for 10
years, with the 1st payment at the end of 10 years is P 100,701.30.
If money is worth 8%, what is the value of R? (#23, May 2004)
60) An investment of P 2,500 is made at the end of each year with
interest of 2.5% compounded annually. (Sit. 11, 31-33, Nov. 2004)
Determine the equal payment series compound amount factor after
8 years.
Determine the total amount of the investment after 8 years.
How long (in years) will it take for the investment to amount to P
59,865?
61) An ordinary annuity has a nominal interest rate of 6% compounded
semi-quarterly for 8 years. (Sit. 8, 22-24, May 2005)
What is the present worth factor?
What is the sinking fund factor?
What is the capital recovery factor?
62) An amount of P 200,000 is deposited for a period of 8 years.
Compute the interest if: (Sit. 9, 25-27, May 2005)
It was made at 18% compounded bi-monthly?
It was made at 18% compounded continuously?
It was made at a simple interest rate of 18%?
63) If money is worth 8% annually, what annual payment is required to
raise P 350,000 after 12 years? (#22, Nov. 2005)
64) An engineer borrowed a sum of money under the following terms: P
650,000 if paid in 90 days or P 600,000 if paid in 30 days. What is
the equivalent annual rate of simple interest? (#23, Nov. 2005)
65) An equipment costing P 500,000 has a life expectancy of 5 years.
Using of the sum’s year digit method of depreciation, what must be
its salvage value such that its depreciation charge in for the first
year is P 100,000? (#24, Nov. 2005)
66) How many years will a deposit triple itself at an interest rate of 7%
per annum compounded continuously? (#17, May 2006)
67) P 50,000 is deposited annually at an interest rate of 6% per annum
compounded continuously. How many years will it accumulate to P
1M? (#18, May 2006)
68) An equipment costing P 60,000 have a book value of P 4,000 after
8 years. Find the constant percentage of the declining book value.
(#19, May 2006)