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ENGINEERING ECONOMY REFRESHER SET 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 daca: 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 = F 12 million Selling price of ice = P 5S per kg. 1228 b. 1140 ©. 386 d. 1420 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 fined 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 sinking fund is deposited annually and the capacity of water supply in Singapore is 3.5 billion. a. F 33.93 b. F 34.45 e. 35.20 d. 31.70 Find the nominal rate which if compounded quarterly is equivalent to 6.5% compounded semi annually. a. 4.39% b. 6.448% ec. 5.318 d. 7.43% An engineer promised to pay P 36,000 at the end of 30 days. He was offered 10% discount if he pays in 30 days. Find the rate of interest. a. 2.1% b. 34.7% ic. S168 a. 66.6% The pensionnaire will receive F 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? Bl million b. P 4 million ec. B10 million d. P 6.5 million An urban bank has a mortgage offers of 12% compounded continuously. What is the effective annual interest? a. 12.36% b. 12.55% c. 12.75% d. 12.68% Which of the following is not described by the bond value? a. agrees to lend the bond issuer money ©. maximizes the economic well-being b. receives periodic interest payments a. provides excellent commercial value SITUATION 1: For a nominal rate of 6% compounded semi-quarterly for & years in an ordinary annuity, 8. 10. 11. 12. 13. 14. 15. Compute the sinking fund factor. a. 0.0078 b. 0.0011 O.0122 d. 0.0085 Compute the present worth factor. a. 44.71 b. 50.68 ec. 71.55 d. 64.78 Compute the capital recovery factor. a. 0.0155 b. 0.0197 ec. 0.0216 d. 0.0318 A parent on the day of the child is born wishes to determine what lump sum would have to be paid into an account annually, in order to withdraw P 20,000.00 each on the child's 1a", 15, 20, and 21" birthdays? a. BP 35,941.73 b_ PB 33,941.73 ©. 30,941.73 d. P 25,941.73 The profit on a product selling for P 82.00 is 10% of the selling price. What percentage increase in production cost will reduce the profit by 60%? a. 6.67% b. 6.76% c. 7.668 da. 7.76% An engineering firm purchased a second hand truck for P 530,000 and paid P 15,000 for freight and taxes to the job site. The equipment has a normal lige of 10 years with a trade in value of P 50,000 against the purchase of a new equipment at the end of the life. Determine the annual depreciation cost by the straight line method. a. P 50,900 b. P €1 300 49 500 d. 48 980 The paper currency issued by the Central Sank which forms part of the country’s money supply. a. Treasury bills b. Bank nove c. Check d. Coupon An inem is purchased for FP 100,000. Annual cost is P18,000. Using interest rate of 34, what is the capitalized cost of the perpetual service? a. P 310,000 b_ P 315,000 ec. P320,000 d. P 325,000 SITUATION 2: A German dentist bought a machine 10 years ago for P 9 million with an expected life of 20 years. The new assistant anticipated how that the machine will serve well for another 6 years only and purchase a new apparatus at P 12 million with an expected life of 16 years. The old machine is depreciated as anticipated and can be sold now at P & million. Operating cost of the old machine is P 100,000 and the new machine is P 50,000 per year. Salvage value is 10% of the initial value for both machines regardless of length of the time to be used. If money is worth 10% to the company, 16. Compute the annual cost of the old machine. a. Pl million bP 1.4 million P 2.1 million d. P 3.0 million 17. Compute the annual cost of the new machine. a. 1.56 million b. P 1.70 million P 1.88 million d. P 2.12 million 18. Compute the difference in cost to prevent replacement. a. P 126,777 b. P 131,384 ec. B 141,256 P150,539 SITUATION 3: Define the following terms in engineering economics. 19. These are the additional costs of producing one more unit of a product. a. Marginal cost b. Sunk cost c. Increment cost d. Fixed cost 20. These involve with the values for all attributes must be converted into a common measurement scales in every economic alternative. a. Taxation scale b. Compensatory modelsc. Dimensional model d-. Cash flow 21. It refers to the period of time in years that results in the minimum equivalent annual cost. a. Ownership life b. Physical life ce. Useful life d_ Economic life 22. A bank loan of P 2,000 was made at 8 & simple interest. How long would take in yaers for the amount of the loan and interest equal to P 3,280.00? a. € be T c. 8 a. 5 23. A man paid P 110,000 for a P 100,000 bond that pays P 4000 per year. In 20 years, the bond will be redeemed for F 105,000. What net rate of interest will the man obtain on his investment? a. 3.37% b. 78 co. 3.56% d. 3.408 24. Which of the following is NOT a common factor for break even analysis? a. Capacity utilisation c. Rate of return b. Annual revenue and expenses d_ Interest rates SITUATION 4: The original cost of a certain machine is P 150,000 has a life of 83 years with a salvage value of P 9,000. 28. Determine the declining balance factor K. a. 0.1755 b. 0.2127 0.2965 d. 0.3476 26. How much is the depreciation on the 5 year , if the constant percentage of declining value is used? a. P 10,893.62 b. P 23813.02 co. 44,325.86 d_ 32425.20 27. R machine costing F 45,000 is estimated to have a salvage value of F 4,350 when retired at the end of 6 years. Depreciation cost is computed using a constant percentage of the declining book value. What is the annual rate of depreciation in percent? a. 33.25% b. 32.25% c. 35.25% d. 21.158 28. A loan of P 2,000 is made for a period of 13 months, from July 1 to July 31 the following year, av a simple interest of 20%. What is the future amount is due at the end of the loan perisd? a. B 2276 b. P 2850 P2433 d_ P2371 25. A telecoms firm purchased infrared equipment for P € million. Freight and installation charges amounted to 3% of the purchased price. If the equipment shall be depreciated over a period of 8 years with a salvage value of 5%, determine the depreciation using sum of years digit method. a. F 618,125 be. P S57,423 c. F 684,701 P 652,333 30. How long will it take money to quadruple if it earns 7% compounded semi-annually? a. 26.55 years b. 20.15 fc. 33.16 d. 27.86 SIUIATION 3: A utility company is considering the following plans to provide a certain service required by resent demand and the respective growth of demand for the coming 18 years. Plan R requires an immediate investment of 500,000 in property that has an estimated life of 18 years and with 20% terminal salvage value. Annual disbursements for operation and maintenance will be 50,000. Annual property taxes will be 2% of the Zirst cost. 47. PF 500 is deposited each year into a savings bank account that pays $4 nominal interest, compounded continuously. How much will be the account at the end of § years? a. B 2769.59 Bb. B 2449.64 c. BD 2849.65 d. P 2347.96 SITUATION 4: An ofl company is being offered a special coating for the gasoline underground tank installation in its service stations which will increase the life of the tank from the usual 10 years to 15 years. The cost of the special coating will increase the cost of the 40,000-tank to 58,000. Cost of installation for either of the tanks is F24,000. If the salvage value for both is cero, and interest rate is 26%, Machine wio coating Machine wi special coating First Cost 40,000 58,000 Installation 24,000 24,000 Salvage Value 0 0 Estimated Life 10 years 15 years 48. Compute the depreciation for machine without coating. a. BP 1556.23 b. 1331.45 ce. 1630.16 d_ 2077.59 49. Compute the depreciation for machine with coating. a. B 557.80 b. P 627.23 c. 697.08 4. 781.24 50. Compute the rate of return on additional investment on machine with special coating. a. 5.188 b. 4.75% c. 3.36% da. 681s 
