Engineering Economy Refresher:
Optimizing Costs and Investments
Engineering Economy Refresher SET
Situation 1: Ordinary Annuity
Compute the number of tons that the multinational ice plant company
must be able to sell per year to break even based on the following data:
Cost of electricity = P 20,000.00
Tax to be paid per ton = P 2,000
Real estate tax per year = P 3.5 million
Salaries and wages = P 25 million
Other expenses = P 12 million
Selling price of ice = P 55 per kg.
The correct answer is c. 986 tons.
A certain water works system in Singapore costs P 600 million and in
20 years it will have depreciated P 400 million in value. If the annual
interest on bond is 5% and the local interest is fixed at 8% yearly and if
the annual operating expenses amounted to P 80 million, what must be
the charge per million cu m per year?
The correct answer is a. P 33.93.
Find the nominal rate which if compounded quarterly is equivalent to
6.5% compounded semi-annually.
The correct answer is b. 6.448%.
An engineer promised to pay P 36,000 at the end of 90 days. He was
offered 10% discount if he pays in 30 days. Find the rate of interest.
The correct answer is c. 51.6%.
The pensionnaire will receive P 5,000 per week at the rest of his/her
life. If the social security agency has a contribution of 6.5% per year
and compounded weekly, what is the present worth of that financial
benefit?
The correct answer is d. P 6.5 million.
An urban bank has a mortgage offers of 12% compounded continuously.
What is the effective annual interest?
The correct answer is b. 12.55%.
Which of the following is not described by the bond value?
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