PHINMA - UNIVERSITY OF PANGASINAN

ARELLANO ST. DAGUPAN CITY

COLLEGE OF ENGINEERING AND ARCHITECTURE

ECO 017 – ENGINEERING ECONOMICS
1. When an annuity has a fixed time span, it is known as?
a. Ordinary Annuity
b. Annuity Certain
c. Annuity Due
d. Deferred Annuity
e. None of the above
2. The cash flow associated with a strip-mining operation is expected to be $200,000 in year 1,
$180,000 in year 2, and amounts decreasing by $20,000 per year through 8. At an interest rate
of 12% per year, the equivalent annual cash flow is nearest to:
a. $61,970
b. $142,738
c. $185,070
d. $261,970
e. None of the above
3. A debt of Php 10,000.00 with interest at the rate of 20% compounded semi-annually is to be
amortized by 5 equal payments at the end of each 6 months, first the payment is to be made
after 3 years. Find the semi-annual payment.
a. Php3345.55
b. Php 3400.67
c. Php 4300.56
d. Php 4248.48
e. None of the above

4. In the problem above, how much is the principal repaid at the end of period in it’s 5 th payment?
a. Php 2690.99
b. Php 2901.78
c. Php 3191.97
d. Php 3862.28
e. None of the above
5. In five years P18,000 will be bedded to pay for a building renovation. In order to generate this
sum an annuity consisting of three annual payments is established now. What payment is
necessary if money is worth 15% annually
a. P 3919.53
b. P3567.89
c. P4000
d. 4320.55
e. None of the above
6. Mr. M left a wealth worth Php 5,000,000.00 to establish a perpetual charitable foundation. The
foundation trustees decided to spend Php 1,200,000.00 to provide facilities immediately and to
provide Php 100,000.00 of capital replacement at the end of each 5-year period. The investment
funds earned 12% per annum, how much would be the capital replacement’s present value?
a. Php 156,067.34
b. Php 132,456.89
c. Php 131,174.78
d. Php 158,678.90
e. None of the above

7. In the problem above, what would be the year end amount available perpetuity from the
endowment for the charitable purposes?
a. Php 345,567.89
b. Php 440,259.03
c. Php 365,234.99
d. Php 425,367.90
e. None of the above
8. The maintenance cost for a car this year is expected to be $500. The cost will increase $50 each
year for the subsequent 9 years. The interest is 8% compounded annually. What is the present
worth of the maintenance for the car over the full 10 years?
a. $4653.88
b. $4700.90
c. $6730.99
d. $6345.92
e. None of the above
9. In the problem above, what is the future worth of the maintenance for the car over the full 10
years?
a. $ 8796.66
b. $11234.55
c. $10047.38
d. $9234.88
e. None of the above
10. Find the present worth of perpetuity of P6,000 annually with an interest rate of 10%
annually, if the first payment will be given after 3 years
a. Php 65900.56
b. Php45607.88
c. Php 49586.77
d. Php 45889.92
e. None of the above

11. The action or process of reducing or paying off a debt with regular payments.
a. Gradient
b. Annuity
 c. Annual Cost
d. Amortization
e. Benefit Cost

12. An engineer must choose between two technically equivalent alternatives, A and B. Based upon
the data in the table below and an interest rate of 9%, which alternative should be selected?

a. Choose A; we want to maximize the costs

b. Choose B; we want to minimize the costs
c. Choose A; we want to minimize the costs
d. Choose B; we want to maximize the costs
e. I don’t wanna choose

13. With a 12% interest rate, approximately how much money you invested today in order
to withdraw $1000 per year at the end of each year for 10 years?
a. $5650.22
b. $6734.99
c. $7200.34
d. $6205.99
e. None of the above
14. What is the accumulated amount of five-year annuity paying P 6000 at the end of each year,
interest at 15% compounded annually?
a. P 40454.29
b. Php 41,114.29
c. Php 41,454.29
d. Php 40544.29
e. None of the above
15. How much would be deposited at 6% each year beginning on January 1, year 1, in order to
accumulate Php 5000 on the date of the last deposit, January 1, year 6?
a. Php 725.00
b. Php 717.00
c. Php 715.00
d. Php 751.00
e. None of the above
16. A payment of $15,000 8 years from now is equivalent, at 12% interest, to an annual payment for
10 years starting at the end of this year. The equivalent uniform annual payment is closest to
a. $1072
b. $1210
 c. $3191
d. $ 1500
e. None of the above
17. In amortization, accounting technique is used to _______ lower the book value of a loan or an
intangible asset over a set period of time
a. Periodically
b. Gradually
c. Linearly
d. Eventually
e. Don’t know
18. Anna purchased a new tooling machine for 20,500. It is projected that it will have a useful life
of 9 years with a 5,000 salvage value at the end of the 9 years. Assuming a 10% interest rate,
the equivalent uniform annual cost is approximately
a. 1550
b. 1722
c. 3191
d. 3223
e. None of the above

19. Find the period of deferral of an annual payment of P2500 for 24 years that will start 12 years
from now.
a. 12 periods
b. 13 periods
c. 11 periods
d. 15 periods
e. None of the above
20. A piece of construction equipment has an initial cost of 80,000, a salvage value of 10,000, and
annual operating costs of 13,000. Assuming a 15-year useful life and a 10% interest rate, the
equivalent uniform annual cost of the equipment is approximately
a. 17667
b. 22150
c. 23205
d. 24105
e. None of the above

21. Engineering economics can help answer all of the following questions except
a. Which project/alternative is more economical?
b. How long will it take before I have $1,000,000 in my bank account?
c. Shall I lease or buy a backhoe for my construction company?
d. How can I maintain a high standard of on-the-job safety for my employees?
e. None of the above

22. If you obtain a loan of Php 1M at the rate of 12% compounded annually to build a house, how
much must you pay monthly to amortize the loan within a period of 10 years?
a. Php 15000
b. Php 15600
 c. Php 14000
d. Php 14500
e. None of the above

23. How much must you invest today in order to withdraw P2000 annually for 10 years if the
interest rate is 9%?
a. Php 15245.67
b. Php 12800
c. Php 12679.90
d. Php 15200.89
e. None of the above
24. Manny purchased on monthly installment a P 100000 worth of land. The interest rate is 12%
nominal and payable in 20 years. What is the monthly amortization?
a. Php 1101.08
b. Php 1121.01
c. Php 1152.15
d. Php 1128.12
e. None of the above
25. Money borrowed today is to be paid in 6 equal payments at the end of 6 quarters. If the interest
rate is 12% compounded quarterly. How much was initially borrowed if quarterly payment is
Php 2000.00
a. Php 10834.38
b. Php 10382.90
c. Phpn10586.99
d. Php 10200.56
e. None of the above

26. Amount of money invested in order to sustain the original machine.

a. Capital
b. Annual and Maintenance Cost
c. Replacement Cost
d. Capitalized Cost
e. None of the above
27. It is the decrease in value of fair value of an asset.
a. Annuity
b. Inflation
c. Gradient
d. Depreciation
e. None of the above
28. ACO company wishes to give each 80 employees a holiday bonus. How much is needed to invest
monthly for a year at 12% nominal interest rate compounded monthly, so that each employee
will receive P2000 bonus?
a. Php 12615
 b. Php 12608
c. Php 12600
d. Php 12300
e. None of the above

29. Which of the following may increase by a relatively constant amount each period.
a. First Cost
b. Maintenance
c. Repair
d. Replacement Cost
e. None of the above

30. It is where payment period is not the same as the interest period however it can be
converted to simple annuity by making the payment period is the same as the
compounding period by concepts of effective rates

a. Annuity
b. Simple Annuity
c. Ordinary Annuity
d. General Annuity
e. None of the above
31. How much must you invest today in order to withdraw P 2000 annually for 10 years if the
interest rate is 9%?
a. Php 12853.32
b. Php 12881.37
c. Php 12385.32
d. Php 13503.45
e. None of the above
32. Find the present value in pesos, of a perpetuity of Php 15000 payable semi-annually if money is
worth 8% compounded quarterly
a. Php 372537
b. Php 374977
c. Php 373767
d. Php 371287
e. None of the above

33. Engineering economics may be useful for answering all of the following except.
a. Determining which projects are worthwhile
b. Determining how safe a project is to construct
c. Determining which projects have higher priority
d. Determining how a project should be designed
e. None of the above
34. At 6% interest rate, find the capitalized cost of a bridge whose cost is P200 million and life is 20
years, if the bridge must be partially rebuilt at a cost of P100 million at the end of each 20 years.
 a. Php 255.55 M
b. Php 254.67 M
c. Php 245.31 M
d. Php 250.56 M
e. None of the above
35. A piece of machinery can be bought for P10000 cash or P2000 down and payments of 750 per
year for 15 years. What is the annual interest rate for every payment?
a. 5%
b. 4.61%
c. 3.71%
d. 6%
e. None of the above
36. A second hand motorcycle can be purchased by 5-end-of-month payments. The first payment
would be Php 5000 and would increase by Php 500 every payment. Should a buyer opt to pay it
at once rather than by installment, how much would it cost him if money is worth 6%
compounded quarterly?
a. Php 27566.67
b. Php 25437.88
c. Php 28904.88
d. Php 26589.85
e. None of the above
37. If P500 is invested at the end of each year for 6 years at an effective annual interest rate of 7%.
What is the total amount available upon the deposit of the 6 th payment?
a. P4503.88
b. P3576.645
c. P3200.99
d. P4350.90
e. None of the above
38. Determine the present worth of deferred annuity, consisting of 10 semi-annual payments, each
P1000, the first at the end of the third year. Money is worth 14% compounded semi-annually.
a. 4993.66
b. 3500.55
c. 5007.7
d. 4200.56
e. None of the above
39. Determine the capitalized cost of an equipment costing P2 million with an annual maintenance
of P200,000 if money is worth 20% annually
a. P3500000
b. P3000000
c. P2345000
d. P3200000
e. None of the above
40. A hotel curtains on it’s windows including it’s rods at a total cost of P500000. These curtains will
be replaced every 4 years at a cost of P400000 whilts the old curtains can be sold at Php 50000
upon replacement. Find the capitalized cost of these expenses if money is worth 4% yearly.
a. P2304555.88
b. P2690000
c. P2700345.56
d. P2560537.90
e. None of the above
41. A form of insurance or investment entitling the investor to a series of annual sums.
a. Life insurance
b. Annuity
c. Amortization
d. Ordinary Annuity
e. None of the above

42. A bank offers a 12 % interest to be compounded annually. How much should a teacher deposit
now if he wants to receive Php 15000 at the end of each year for 5 years?
a. Php 50000
b. Php 53256.78
c. Php 42500
d. Php 54071.64
e. None of the above

43. Ms. Perez borrowed money as capital for her business. She plans to pay back her lender by
paying Php 5000 at the beginning of each month for the next 5 years at an interest rate of 10 %
compounded monthly. How much can she borrow at this rate?

a. Php 342660.9
b. Php 237287.90
c. Php 250345.9
d. Php 273920.9
e. None of the above
44. Interest conversion or compounding period is equal or the same as the payment interval.
a. Annuity
b. Annuity Certain
c. Simple Annuity
d. General Annuity
e. None of the above
45. It is an annuity which the periodic payment is made at the beginning of each payment interval.
a. Annuity Certain
b. Ordinary Annuity
c. Deferred Annuity
d. Annuity Due
e. None of the above
46. If money is worth 10% compounded quarterly, what monthly savings is required monthly in
order to have P200,000 at the end at the end of 10 years.
a. P851.30
b. P981.28
c. P1021.88
d. P756.92
e. None of the above
47. A debt of P20,000 with interest at rate of 14% compounded semi-annually is to be amortized by
4 equal payments at the end of each 6 months; the first payment is to be made after 2 years.
Find the semi-annual payment.
a. P5904.56
b. P7233.34
c. P6503.45
d. P6256.30
e. None of the above

48. Find the present worth of perpetuity of P10,000 semi annually with an interest rate of 10%
quarterly, if the first payment will be given after 5 years.
a. P106701.34
b. P201302.44
c. P217406.64
d. P120456.88
e. None of the above
49. Determine the capitalized cost of a structure that requires an initial investment of Php 1,500,000
and an annual maintenance of P 150,000.Interest is 15%.
a. P2750000
b. P2500000
c. P3750327
d. 2250000
e. None of the above
50. The present worth of of P40,000 in the first year and amounts of increasing by P3,000 per year
through five years at an interest rate of 13% per year is?
a. P159229.979
b. P160234.967
c. P234523.992
d. P122348.672