Engr-307 Engineering Economics EXAM 1-Summer June 2016 Name: ID# Question 1-(35
ID: 1220278 • Letter: E
Question
Engr-307 Engineering Economics EXAM 1-Summer June 2016 Name: ID# Question 1-(35 Points Total) 1) A (20 Points) List all items COMPRISE of the: (from 1-8 each question 2 point) a) Annual product total cost is b) Annual operating costs is: 2) State if (True) or (False): Present and future benefits (income) and costs need to be estimated to determine the attractiveness (worthiness) of a new product investment alternative 3) It gives engineers the tools they need to make decisions that maximize the use of resources A- Feasibility study B- Engineering decision C- Engineering economics D. Business decisions Refers to the money entering or leaving a project or business during a specific period of time: A- Cash flow B- Interest rate C- Present worth D- Final future flow Is the price paid for the use of borrowed money? A- Interest B- Benefits C- Investment D- Economics' inflation 4) 5) 6) interest accrues only on the principle amount invested, but with interest is earned on interest: A- Compound interest- Simple interest B- Simple interest-Compound interest Single payment-Compound payment None of the above D.Explanation / Answer
4 (A) - this is the most appropriate option as interest rate is the payment on loans taken, future and present value are methods to value an amount of money during a period of time.
5 (A) interest rate is the payment on loans taken
6 (B) In simple interest, say at 10% for two years on an amount of 1000, the final amount will be 1200 (10% of 1000 for two years - 100+100 added to 1000) but with compound interest, the amount at the end of first year is 1100 and then 10% is applied on 1100, thereby a sort of interest rate applied on the interest earned.
8 (B) in this case, the returns on the project are negative and hence an alternative is required.
1) Final amount in 10 years = 10,000
rate of interest is 5%
assuming simple interest formula,
A = 10xPx0.05 + P
0.05P is the interest earned in a year and multiplying with 10,
we get interest earned in 10 years. we know A = 10,000
1.5P = 10,000
P = 6666.67
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.