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Home Take Exxam EE

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44 views2 pages

Home Take Exxam EE

Uploaded by

znabugrmay20adi
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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Aksum Institute of Technology

College of Civil Engineering and Construction Management


Department of Civil Engineering

Engineering Economics
Home Take Exam (15%)
Name:___________________ID No.__________Section:_____

General Information
 For questions No 2-6
o Check present amount and/or future amount taking 5
year interest period.
o Draw cash flow diagram for 5 years interest period
Instruction
 Submission
o date Friday 18/10/2013 EC physically or in class
 Section C&D 2:30 LT and
 Section A&B 4:00 LT
o It is individual
o Hand write should be clear
1) A person deposits a sum of 15,000 Birr in a bank for his daughter’s educational expenses
she will be admitted to university after 10 years. Find the future amount of the deposited
money at the time of admitting his daughter in the university. ( 10 Points each)
a. If the bank pays 10% interest rate, compounded annually
b. If the bank pays 10% interest rate, compounded monthly
2) A person who is just 30 years old is planning for his retired life. He plans to invest an
equal sum of 10,000 Birr at the end of every year for the next 30 years starting from the
end of next year. The bank gives 8 % interest rate compounded annually. Find the
maturity value of his account when he is 60 years old. ( 15 Points)
3) A company is planning to expand its business after 5 years from now. The money required
for the expansion programme is 4,000,000 Birr. What annual equivalent amount should
the company deposit at the end of every year at an interest rate of 15% compounded
annually to get 4,000,000 Birr after 5 years from now? ( 15 Points)
4) A grade 1 consultant wants to set-up a reserve which will help it to have an annual
equivalent amount of 25,000,000 Birr for the next 20 years towards its employees welfare
measures. The reserve is assumed to grow at the rate of 15% annually. Find the single-
payment that must be made as the reserve amount now. ( 15 Points)
5) A bank gives 5,000,000 Birr loan to a contractor to purchase an excavator which at an
interest rate of 18% compounded annually. This amount should be repaid in 20 yearly
equal installments. Find the installment amount that the company has to pay to the bank. (
15 Points)
6) A working woman is planning for her retired life. She has 20 more years of service. She
would like to deposit 10,000 Birr at the end of the first year and thereafter she wishes to
deposit the same amount (10,000 Birr) with: ( 15 Points each)
a. An annual increase of 500 Birr for the next 14 years with an interest rate of 18%.
b. An annual increase of 10% for the next 14 years with an interest rate of 18%.
Find the total amount at the end of the 15th year and equivalent single payment should
made now.
7) An equipment company recently advertised its new excavator for a down payment of
4,500,000 Birr. Alternatively, the car can be taken home by customers without making any
single payment, but they have to pay an equal yearly amount of 750,000 Birr for 15 years
at an interest rate of 18%, compounded annually. Suggest the best alternative to the
customers. ( 15 Points)
8) A grade-7 contractor is planning to upgrade his grade to grade-1 after 10 years from now.
The expected money required for the upgrading (equipment, working capital, staff salary
etc.) is 100,000,000 Birr and this amount is covered by bank as a loan. The contractor can
deposited 15,000,000 Birr at the end of every year for the next eight years from net profit
of his projects in hand to recover the loan. If the interest rate of the bank is 18% for the
contractor, check whether the contractor can recover his loan. If not, what are the
arrangement (quantitative) which the contractor should make to recover his loan? ( 25
Points)

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