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Sheet 3

This document contains 15 engineering economy problems related to topics like calculating investment amounts, present and future values of investments, loans, savings, and cash flows. The problems cover a range of financial calculations including compound interest, uniform annual payments, present worth, and cash flows.

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Ahmed Mahmoud Ahmed
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53 views1 page

Sheet 3

This document contains 15 engineering economy problems related to topics like calculating investment amounts, present and future values of investments, loans, savings, and cash flows. The problems cover a range of financial calculations including compound interest, uniform annual payments, present worth, and cash flows.

Uploaded by

Ahmed Mahmoud Ahmed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Engineering Economy

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Sheet 3
1- How much would you need to invest annually, at an interest rate of 4% in order to have 12,000 $ after 10 years?
2- A bond will be worth 50,000 $ in 30 years. At a discount rate of 8%, how much would you pay for that bond
today?
3- A maintenance fund has been established that currently contains 8,500 $. Assuming the fund earns 7% annually,
How much can be spent each year if the fund is to last for 12 years?
4- If a company has an opportunity to invest 40,000 $ now for ten years at 10% per year simple interest or 15% per
year compound interest, which investment should be made?
5- Suppose that you borrow 20,000 $ now, promising to repay the loan principle plus accumulated interest in
seven years at i=12% per year. How much would you replay at the end of seven years?
6- How much money must be deposit uniformly into saving account each year. If you want to have 100,000 $ after
10 years from now?
7- You borrow 100,000 $ today, to be paid back in 10 equal payments at the end of each year, at 6% interest. How
much are the payments?
8- You invest 10,000$ at the end of each year for 5 years. If i=4%, What is the value of the account at end of year 5?
9- A solar heating system costs 10,000 $, has an estimated life of 1o years and a scrap value of 1500 $. Assuming no
inflation and an interest rate of 4% , what uniform annual amount must be invested at the end of each of the 10
years in order to replace the heating system?
10- Interest on a debt is 12% per year compounded monthly. Compute the effective annual interest rate?
11- A more efficient heating system adds 7,500 $ to the cost of your project. Adding this system will save 1200 $ per
year. If the discount rate is 8%, about how long will it take to pay back the initial investment?
12- A father invests 15,000 $ now in a fund paying 10% annually. He intends to leave the money in the fund, both
interest as it accumulates and principal in 12 years he will draw the money to finance his daughters education
at the university?
a. Draw the cash flow diagram?
b. How much will be in the account at the end of the tenth year?
13- Suppose you get a student loan for 8,000$ and your payments are deferred until after you graduate, 2 years
from now. Then, you will make 15 yearly payments (starting 2 years from now), i=8%. What are your payments?
14- How much do you need to deposit today (P) to withdraw 25,000 $ at n=1 & 3,000 $ at n=2 and 5,000 $ at n=4, if
your account earns 10% annual interest?
15- What is the present worth of an annuity of $ 2500 per year for the next 10 years if the interest Rate is 12%.

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