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RI - Engineering Econ 4

The document contains 16 problems related to engineering economy topics like simple discount rates, inflation, depreciation methods, and book value calculations. The problems cover calculating interest rates, adjusting values for inflation, using depreciation methods like straight line, MACRS, and sinking fund to find equipment book values over time. Multiple choice questions at the end test understanding of concepts like salvage value, cost, depreciation schedules, and net book value.

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Prince Mallari
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535 views2 pages

RI - Engineering Econ 4

The document contains 16 problems related to engineering economy topics like simple discount rates, inflation, depreciation methods, and book value calculations. The problems cover calculating interest rates, adjusting values for inflation, using depreciation methods like straight line, MACRS, and sinking fund to find equipment book values over time. Multiple choice questions at the end test understanding of concepts like salvage value, cost, depreciation schedules, and net book value.

Uploaded by

Prince Mallari
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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Civil Engineering November 2020

Review Innovations Engineering Economy 4


Simple Discount Rate years of service. If during the first 4 years of service 1. An equipment costs P480,000 and has a salvage
it produces 100 units per year and 80 units each value of 10% of its cost at the end of its life of 36,000
1. Nico Quiroz borrowed 10,000 php from a bank year for the remaining years. What will be the book operating hours in a period of 5 years. In the first
and promised to pay in 1 year. He received only value after 5 years of service using service output year of service, it was used for 12,000 hours. If it
9600 php. Find the rate of discount and the rate of method? Ans. 40,000 was used for 15,000 at the end of the second year,
interest. Ans. 4%, 4.17%, find the depreciation at the second year.
9. A machinery worth P10,000 has an anticipated
2. Crystal borrowed money from the bank. She salvage value of P3,000 at the end of 7 years’ a. 12,000 c. 120,0000
receives 1340 php from the bank and promised to depreciable life. Compute the depreciation of the
pay 1500 php at the end of 9 months. Determine the machinery on the 4th year only using MACRS b. 180,000 d. 18,000
simple interest rate and the discount rate. Ans. method. Ans. 1,249
15.92%, 13.73% 2. The cost of an equipment is P500,000 and the cost
10. An equipment worth P5,000 has an anticipated of installation labor, taxes, and miscellaneous
3. A C.E. borrowed P50,000 from a bank and salvage value of P5,000 at the end of 5 years’ expenses is P30,000 pesos. If the salvage value is
promises to pay the loan after 1 year. The C.E. depreciable life. Compute the depreciation of the 10% of the cost of equipment at the end of its life of
received P45,000 in cash. Determine the rate of equipment on the 3rd year only using MACRS 5 years, compute the book value at the end of the 3rd
discount ant the rate of interest. Ans. 10%, 11.11% method. Ans. 960 year using MACRS method.

4. If the proceeds of the loan P2,460 will be paid Situation - A machine is purchased at P10200 with a. 106,000 c.101,760
P2,840 at the end 1 year and 3 months, what is the an expected salvage value of P1,200 at the end of its
simple discount rate? Ans. 11% economic life of 8 years. If money is worth 6% per b. 169,600 d.122,640
annum, determine the book value of the machine at
Inflation the end of 4 years using:
3. A telephone company purchases a microwave
radio equipment for P6M. If the equipment shall be
5. A P2,000 in 2 years has an average inflation rate of 11. Straight Line Method; Ans. P5700; depreciated over a period of 8 years with a salvage
6% and the real interest rate of money is 10%. value of 5% of the cost of equipment, determine the
Determine the inflation-adjusted interest rate. 12. . SOYD method; Ans. P3700; worth of the equipment on the 4th year after
Ans. 16.6% deducting the depreciation changes using MACRS
13. Matheson’s method; Ans. P3499 method.
6. A company invests P10,000.00 today to be repaid
in 5 years in one lump sum at 12% compounded 14. DDB method; Ans. P3227; a. 750,000 c. 984,375
annually. If the rate of inflation is 3% compounded
annually, how much profit is relieved over 5 years? 15. MACRS method; Ans. P3765 b. 1,312,500 d. 2.215M
Ans. 5,202.0
16. Sinking Fund method; Ans. P6,222 Answers: 1-B, 2-D, 3-D
7. If the cost of money is 9% and the inflation rate is
5%, what interest rate will take care of the cost of
money and inflation? Ans. 14.45%

8. A property is purchased at P 100,000 with a
salvage value of 10% of the original cost after 8
Additional Problems:
Manila: https://www.facebook.com/ReviewInnovationsOfficial Cebu FB: Excel-RI CE Review Specialist Inc. Davao: https://www.facebook.com/reviewinnovations.davaobranch

Civil Engineering November 2020 Review Innovations Engineering Economy 4

Manila: https://www.facebook.com/ReviewInnovationsOfficial Cebu FB: Excel-RI CE Review Specialist Inc. Davao: https://www.facebook.com/reviewinnovations.davaobranch

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