Engineering Economics – Exam

In engineering economics, what does the term “opportunity cost” refer to?

Which of the following project evaluation techniques does not take the time value of money into account?

What does the term “marginal cost” represent in engineering economics?

What is the primary objective of cost-benefit analysis in engineering economics?

In engineering economics, what does the term “sunk cost” refer to?

Which of the following best describes the concept of “time value of money” in engineering economics?

What is the primary objective of “life cycle costing” in engineering economics?

Which of the following best describes the “Annual Worth” method in engineering economic analysis?

The simple interest rate per year that will accumulate the same amount of money in 2 years as a compound interest rate of 20% per year is closest to

An engineer deposits Php 5,000 into a savings account at a rate of 4% compounded quarterly. What will be the balance in the account after 5 years?

A chip manufacturing company wants to have Php 10 million available 5 years from now in order to build new warehouses and shipping facilities. If the company can invest money at 10% per year, the amount that it must deposit each year in years 1 through 5 to accumulate the Php 10 million is closest to

A chemical engineering company has recently invested in a new reactor for the production of a specialty chemical. The estimated operating cost of the reactor is Php 26,000 for year 1 and it increases by Php 1,500 per year through year 5. The equivalent uniform annual cost per reactor over years 1 to 5, at an interest rate of 8% per year, is closest to

At i = 8% per year, the annual worth for years 1 through 6 of the cash flows shown is closest to:

The winner of a multistate mega millions lottery jackpot worth Php 175 million was given the option of taking payments of Php 7 million per year for 25 years, beginning 1 year from now, or taking Php 109.355 million now. The interest rate that renders the two options equal to each other is closest to

Company A is planning to upgrade an aging manufacturing operation 5 years from now at a cost of Php 100,000. If the company plans to deposit money into an account each year for 4 years beginning 2 years from now (first deposit is in year 2) to pay for the expansion, the amount of the deposit at 10% per year interest is closest to

 An interest rate of 12% per year, compounded monthly, is nearest to

The cost of replacing a high-definition television production line in 6 years is estimated to be Php 500,000. At an interest rate of 14% per year, compounded semiannually, the uniform amount that must be deposited into a sinking fund every 6 months beginning now is closest to

Compute for the number of blocks that an ice plant must be able to sell per month to break even based on the following data:

Cost of electricity per block…….. P 20.00

Tax to be paid per block………… P 2.00

Real Estate Tax…………………  P 3500.00/mo

Salaries and Wages………….… P 25,000/mo

Others………………………….… P 12,000/mo

Selling Price of ice…………….…P 55.00/block

Classic straight-line depreciation of a Php 100,000 asset takes place over a 5-year recovery period. If the salvage value is 15% of first cost, the depreciation charge for year 3 is closest to

A motorized cultivator with a first cost of Php 28,000 and salvage value of 25% of the first cost is depreciated by the double declining balance method over a 5-year period. If the operating cost is Php 43,000 per year, the depreciation charge for year 2 is closest to

You expect to receive an inheritance of Php 50,000 six years from now. Its present worth at a real interest rate of 4% per year and an inflation rate of 3% per year is closest to

A uniform series of payments begins in year 4 and ends in year 11. If you use the P∕A factor with n = 8, the P value you get will be located in year

The capitalized cost of an initial investment of P200,000 and annual investments of P30,000 forever at an interest rate of 10% per year is closest to

Problems 23 through 25 are based on the following cash flows for alternatives X and Y at an interest rate of 10% per year.

In comparing the alternatives on a present worth basis, the PW of machine X is closest to:

Problems 23 through 25 are based on the following cash flows for alternatives X and Y at an interest rate of 10% per year.

In comparing the alternatives on a future worth basis, the FW of machine X is closest to

The capitalized cost of machine Y is closest to

The annual worth for years 1 through infinity of P50,000 now, P10,000 per year in years 1 through 15, and P20,000 per year in years 16 through infinity at 10% per year is closest to

According to Descartes’ rule of signs, the possible number of rate of return values for the net cash flow series ++++−−−−−−+−+−−−++ is

Consider the following accounting information for an industrial equipment:

First cost of the asset: P 10,000.00

Useful life: 10 years

Estimated salvage value: P 2,000.00

Find the accumulated depreciation at 3^rd year using double declining balance method

A truck for hauling coal has an estimated net cost of P 55,000 and is expected to give service for 250,000 miles, resulting in a P 5,000 salvage value. Compute the allowed depreciation amount for truck usage of 30,000 miles

Given the cash flow shown in the table, determine the payback period.