Scribd
Upload
13 views4 pages

Assignment Engineering Economics and Managment 1

مم

Uploaded by

444xwstphn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
13 views4 pages

Assignment Engineering Economics and Managment 1

مم

Uploaded by

444xwstphn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Engineering Economics

Faculty of Engineering

Assignment

(1) Using a 16 % interest rate, compute the value of F in the following cash
flow:

Cash
1 2 3 4 5 6 7 8 9 10
Flow
End of
Year +200 +200 +200 0 0 +300 +300 +300 0 F

(2) Using a 10 % interest rate, compute the value of F in the following cash
flow:

Cash
1 2 3 4 5 6 7 8 9 10 11
Flow
End
of 0 +500 +500 +500 0 +400 +600 +800 +1000 +1200 F
Year

(3) Using a 15 % interest rate, compute the value of P in the following cash
flow:

Cash
0 1 2 3 4 5 6 7 8 9 10
Flow
End
of P +300 +300 +400 +400 +400 0 +800 +800 +800 +800
Year
(4) Using a 15 % interest rate, compute the value of P in the following cash
flow:

Cash
0 1 2 3 4 5 6 7 8 9
Flow
End
of P +1400 +1150 +900 +650 +600 +600 +600 +600 +800
Year

(5) Two pieces of construction equipment are being analyzed:

End of
0 1 2 3 4 5 6 7 8
Year
Alternative
-2,000 +1,000 +850 +700 +550 +500 +500 +500 +500
(A)
Alternative
-15,00 +700 +300 +300 +300 +300 +400 +500 +600
(B)

Based on a 9% interest rate, use the present worth to determine which alternative
should be selected?

(6) Calculate the present worth and annual equivalent cost at interest rate of
10% using arithmetic gradient interest factor for the cash flows given in the
following table:
End of Year Cash Flow ($)
1 -20,000
2 -19,000
3 -18,000
4 -17,000
5 -16,000
6 -15,000
7 -14,000
8 -13,000
9 -12,000
10 -11,000
(7) A contracting company is considering the installation of a concrete batch
plant and running it as a profit center by hiring the plant to its projects and
other projects. The initial cost of the plant $ 250,000. Its recommended
estimated useful life is seven years, with a resale value of $ 40,000 at the end
of the seven years. The total operating cost is estimated to be $ 50,000 per
year, and the total ownership cost including other company cost is estimated
to be $ 60,000 per year. It is also estimated that its operating time will be
2,000 hours per year.
If the company's minimum attractive rate of return is 15%, use the internal
rate of return method to calculate the batch plant hire rate per hour?

(8) A contractor is considering to purchase and install a carpentry workshop for


$ 500,000. His plan is to run the workshop as a profit center by selling its
products to the contractor's projects and to other project as well. The
manufacture recommended useful life of the carpentry machines is eight
years, with a resale value of $ 100,000 at the end of the eight years. The total
operating cost is estimated to be $80,000 per year. The expected average
annual revenue is $ 200,000 per year. If the interest rate is 10%, calculate:
a) The net present worth.
b) The equivalent annual worth.
c) The IROR of this investment.

(9) A contractor plans to purchase equipment. Two manufacturers offered the


estimates below.
Vendor A Vendor B
First cost , $ - 22,000 -27,000
Annual M & O costs:
From the first year to the fourth year - 4,000 - 3,700
After the fourth year - 4,500 - 4,000
Salvage Value,$ 2,000 3,200
Life, Years 6 9

Determine which vendor should be selected on the basis of a present worth


comparison, if the interest rate is 16 % per year.
(10) For the investment project represented by the net cash flows shown in the
below Table, calculate:
a) The net present worth at 11%.
b) The payback period.
c) The internal rate of return of this project.

End of Year Cash Flow ($)


0 -4,000
1 + 900
2 + 900
3 + 900
4 + 900
5 + 900
6 + 1,500

(11) A contracting company is considering the installation of a small concrete


plant at a cost of $ 59,500. The net annual income from this plant will be
$ 10,500. The suppliers of the plant recommend a useful life of only 12
years for the plant. However, the company intends to run the plant for an
extra 3 years after the recommended useful life. This mean incurring
heavy replacement and maintenance costs of $6,500, $7,500 and $ 9,500
during the last three years respectively. The salvage value after 15 years is
estimated to be $5,000. Calculate the internal rate of return for this
project.

You might also like