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Engineering Economy 5 1

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36 views2 pages

Engineering Economy 5 1

Uploaded by

Jan M.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Engineering Economy

Module 5

Geometric Gradient (i=g) A textile mill has just purchased a lift truck
that has a useful life of 5 years. The
A mechanical contractor is trying to engineer estimates that the maintenance
calculate the present worth of personnel costs for the truck during the first year will
salaries over the next five years. He has be $1000. Maintenance costs are expected
four employees whose combined salaries to increase as the truck ages at a rate of
through the end of this year are $250 per year over the remaining life.
900,000php. If he expects to give each Assume that the maintenance costs occur
employee a raise of 5% each year, compute at the end of each year. The firm wants to
the present worth and future worth of his set up a maintenance account that earns
employees' salaries at an interest rate of 5% 12% annual interest. All future maintenance
per year. expenses will be paid out from this account.
How much does the firm have to deposit in
Factors the account now?
USE:
(P/G, i, n) = 6.3970
(P/A, i, n) = 3.6048

A textile mill has just purchased a lift truck


that has a useful life of 5 years. The
engineer estimates that the maintenance
costs for the truck during the first year will
be $1000. Maintenance costs are expected
to increase as the truck ages at a rate of
$250 per year over the remaining life.
Assume that the maintenance costs occur
at the end of each year. The firm wants to
set up a maintenance account that earns
12% annual interest. All future maintenance
expenses will be paid out from this account.
How much does the firm have to deposit in
the account now?
USE:
(P/G. i. n) = 6.3970
(P/A, i, n) = 3.6048
Engineering Economy
Module 5

Perpetuity

What present value sum would be needed


for the annual end-of-year payments of
250,000 each, forever if money is worth
15%

Determine the present value of a perpetuity


of P100,000 payable annually. with the first
payment due at the end of 10 years. Money
is worth 10%.

Find the present value, in pesos, of the


perpetuity of P15,000 payable
semi-annually if money is worth 8%
compounded quarterly.

500,000 are deposited in a savings account


that pays 8% compounded semi-annually.
Equal annual withdrawals are to be made
from the account, beginning one year from
now and continuing forever. Compute the
maximum amount of the equal annual
withdrawal.

If money is worth 9%, find the present value


of perpetuity of 120,500 payable at the
beginning of each year.

What amount of money invested today at


15% interest can provide the following
scholarships: $30,000 at the end of each
year for 6 years, $ 40,000 for the next 6
years, and $50,000 thereafter?

A train was bought and will incur 1,500,000


in annual operations and maintenance for
the first three years. After the three years, it
will be maintained again starting at the end
of the sixth year for another 3 years with the
same amount and such cycle shall continue
infinitely.

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