| Sami Almalki |
| TECH 452 - Engineering Economics |
| 5-Nov-12 |
| Homework # 4 |
| Problem 6.1 |
| An engineering design firm needs to borrow $300,000 from a local bank at an interest rate of 9% over five years. |
| What is the required annual equal payment to retire the lona in five years? |
| AE(9%)=$300,000(A/P,9%,5)= $77,127.74 |
| Problem 6.9 |
| Cosider the following sets of investment projects: |
| Period | Project Cash Flow |
| 0 | ($4,300) | -3,500 | -5,500 | -3,800 |
| 1 | $0 | $1,500 | $3,000 | $1,800 |
| 2 | $0 | $1,800 | $2,000 | $1,800 |
| 3 | $5,500 | $2,100 | $1,000 | $1,800 |
| Cumpute the equivalent annual worth of each project at i=13% determine the acceptability of each project. |
| AE(13%)a= -$4,300(A/P,13%,3)+$5,000(A/F,13%,3)= -$206.8 Not accept |
| AE(13%)b= - $3,500(A/P,13%,3)+$1,500+$300((A/G,13%,3)=$293. Accept |
| AE(13%)c= - $5,500(A/P,13%,3)+$ 3,000 - $1,000(A/G,13%,3)= - $247.95 Not accept |
| AE(13%)d= - $3,800(A/P,13%,3)+$1,800=$ 190.7 Accept |
| Problem6.15 |
| Susan is considring buying a 2011 Smart for Two costing $21,635 and finds that the retaining values of the vehical over |
| next five years are at follow : |
| Prercent of the total value retained after 36 months:28%. |
| If her interst rate is 6% compounded annually, what is the ownership cost of the vehicle over three years? Five years? |
| CR(6%)3 years= ($21,635 - $6,057.80)(A/P,6%,3)+(0.06)($6,057.80)=$6,191.05 |
| CR(6%)5 years= ($21,635 - $3,677.95)(A/P,6%,5)+(0.06)($3,677.95)=$4,483.68 |
| Problem6.16 |
| Nelson Electronics, Inc., just purchased a soldering machineto be used in its assembly cell for flexible disk drives. |
| This machine costs $248,000. because of the specialized function it performs, its useful life is estimated to be five |
| years. At the end of the time, its salvage value is estimated to be $43,000. What is the capital cost for the investment in the firm's interest rate is 18%? |
| CR(18%)=($248,000 - $43,000)(A/P,18%,5)+$43,000(0.18)=$73,299 |
Umar
100.xlsx
