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Engineering Econ Assignment - 1

This document contains an engineering economics individual assignment with 8 questions. Students are asked to calculate things like interest, present value, savings needed, break even quantity, benefit cost ratio, and payback period to evaluate investment alternatives.

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Temam Mohammed
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Download as PDF, TXT or read online on Scribd
7 views

Engineering Econ Assignment - 1

This document contains an engineering economics individual assignment with 8 questions. Students are asked to calculate things like interest, present value, savings needed, break even quantity, benefit cost ratio, and payback period to evaluate investment alternatives.

Uploaded by

Temam Mohammed
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Wolkite University

College of Engineering and Technology


Department of Civil Engineering

Program: Summer
Engineering Economics Individual Assignment (40%)

Write your answer clearly and neatly by showing all the necessary steps
(Each question have 5 marks)
1. Suppose you deposit 10,000 in a bank savings account that pays interest at a rate of 8% per
year. Assume that you don't withdraw the interest earned at the end of each year, but instead
let it accumulate.
(a) How much would you have at the end of year three with simple interest?
(b) How much would you have at the end of year three with compound interest?
2. Find the present value, in birr, of an annuity of 20,000 birr payable annually for 8 years,
with first payment at the end of 10 years, if money is worth 8%.
3. Assume you want to set up a college savings plan for your daughter. She is currently 15
years old and will go to college at age 20. You assume that when she starts college, she will
need at least 100,000birr in the bank. How much do you need to save each year in order to
have the necessary funds if the current rate of interest is 7%?
4. Investment Company 1 accepts $10,000 at the end of every year for 10 years and pays the
investor $600,000 at the end of the 10th year. Investment company-2 accepts $10,000 at the
end of every year for 10 years and pays the investor $1,400,000 at the end of the 15th year.
Which is the best investment alternative? Use present worth base with i = 12%.
5. A person is planning a new project. The initial outlay and cash flow pattern for the new
project are as listed below. The expected life of the project is five years. Find the rate of
return for the new project.
Year 0 1 2 3 4 5
Cash Flow -100,000 30,000 30,000 30,000 30,000 30,000
(Rs.)

6. The costs of producing a certain construction material consist of 50birr per unit for labor
and material cost and 20birr per unit for other variable cost. The fixed cost per month
amounts to 500,000birr. If the material is sold at B280.00 each, what is the break-even
quantity?
7. Calculate the Benefit Cost ratio for a highway expansion project with data given as follows,
by using future worth formulations.
Initial Cost of Expansion 1,500,000 Birr
Annual maintenance cost 65,000Birr
Annual saving and benefit 225,000Birr
Salvage value 300,000Birr
Useful life 10 Years
Interest rate 10%

8. A firm is trying to decide which of two weighing scales it should install to check a package-
filling operation in the plant. If both scales have a 6-year life, by using a payback period
which one should be selected? Assume an 8% interest rate.
Alternatives Cost Uniform Annual End-of-Useful-Life
Benefit Salvage Value
Atlas scale $2000 $450 $100
Thumb scale $3000 $600 $700

Submission Date: August 5, 2024

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