Scribd
Upload
313 views

Engineering Economics Midterm Exam

The document provides instructions and questions for an engineering economics midterm exam. It instructs students to show their work, round answers to two decimals, and submit solutions in PDF format within 1.5 hours. The questions cover topics like calculating depreciation using the sum of years' digits method, constructing a depreciation table, calculating bond worth, and comparing investment plans using present and future worth analysis. It also includes a bonus question comparing two retirement investment plans using future worth.

Uploaded by

RIZZI JOY LUMAGUI
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
313 views

Engineering Economics Midterm Exam

The document provides instructions and questions for an engineering economics midterm exam. It instructs students to show their work, round answers to two decimals, and submit solutions in PDF format within 1.5 hours. The questions cover topics like calculating depreciation using the sum of years' digits method, constructing a depreciation table, calculating bond worth, and comparing investment plans using present and future worth analysis. It also includes a bonus question comparing two retirement investment plans using future worth.

Uploaded by

RIZZI JOY LUMAGUI
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 8

ENGINEERING ECONOMICS

MIDTERM EXAMINATION
INSTRUCTIONS:
Your exam is good for 1.5hrs only. Please read the following carefully before proceeding to the next
slide.
q Show your solution on every item. No solution, no points.
q Make sure that your handwriting is readable. Online solution is not accepted.
q Round off your answer to the nearest two decimal places. Box your final answer.
qOn the last page of this presentation, there is a bonus question. Anyone who can answer it will
have an additional 15 points. However, if your score exceed 100 points, it will automatically
consider perfect score.
q Refrain from resubmitting/copying your classmates’ solution. Anyone caught will automatically
failed.
q Your BS will automatically close after the given time. Make sure you have allotted time for
submission.
qPDF files are only accepted.
q Good luck on your midterm exam. Stay safe!
20 POINTS
1. A certain department bought an asset for 20,000 Pesos. They plan to
keep it for 25 years. If the salvage value of the asset is zero at the end
of the 25th year, Determine the depreciation at the end of the 12th year
using Sum of the years digit.
20 POINTS
2. Marie is the sole proprietor of a small lawn-care service. Last year,
she purchased an eight-horsepower chipper–shredder to make mulch
out of small tree branches and leaves. At the time it cost 8,900 Pesos.
She expects that the value of the chipper–shredder will decline by a
constant amount each year over the next five years. At the end of five
years, she thinks that it will have a salvage value of 1,500 Pesos.
Construct a table that gives the book value of the chipper–shredder
at the end of each year, for six years. Also indicate the accumulated
depreciation at the end of each year.
20 POINTS
3. If money can earn 10 percent compounded semiannually, a bond
maturing in 12 years with a face value of 4,500 Pesos and a coupon rate
of 7%. Calculate the bond worth today.
20 POINTS
4. An 8%, 22-year municipal bond has a 10 000 face value. I want to
receive at least 10 percent compounded semiannually on this
investment. How much should I pay for the bond?
20 POINTS
5. A contractor is planning to buy a new machine for the site. It has 3 machines in
view from three different manufactures. Refer to the table below for the details of
those 3 machines available. Use present worth method of comparison and suggest
the best machine. Use interest rate of 12%.
MACHINE A MACHINE B MACHINE C
Initial Investment 2,500,000 Php 2, 750,000 3,000,000
Annual Revenue 800,000 1st yr: 800,000 and 800,000
decreases 2% each yr
thereafter.
Annual Maintenance 100,000 150,000 1st yr: 80,000 and
increases 8,000
thereafter
Salvage value 500,000 550,000 700,000
Life span 12 years 12 years 12 years
BONUS QUESTION: 15 POINTS
6. Two investment plans are being compared to see which accumulates
more money for retirement. Plan A consists of a payment of 100, 000
Pesos today and then 20, 000 Pesos per year over 20 years. Plan B is
300,000 per year over 20 years. Interest for both plans is 10%. Which
plan is better? Use future worth method of comparison.

You might also like