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ENEECO30 - Problem Set 2

The document is a problem set for an Engineering Economics course, consisting of seven problems that require calculations related to present worth, future worth, retirement savings, capitalized costs, and amortization. Each problem involves financial concepts such as interest rates, deposits, and time periods. Students are instructed to show complete solutions and box only their final answers to receive points.

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Garcia Angela Dianne
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11 views1 page

ENEECO30 - Problem Set 2

The document is a problem set for an Engineering Economics course, consisting of seven problems that require calculations related to present worth, future worth, retirement savings, capitalized costs, and amortization. Each problem involves financial concepts such as interest rates, deposits, and time periods. Students are instructed to show complete solutions and box only their final answers to receive points.

Uploaded by

Garcia Angela Dianne
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
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ENEECO30 - ENGINEERING ECONOMICS PROBLEM SET 2

Instruction: Solve the following problems. Show your complete solution and box only your final
answers. No box, no points.

1. A contractor deposits ₱200,000 at the end of each quarter for 5 years into a bank that pays a
nominal annual interest rate of 12% compounded annually.
a. Compute for the present worth of the deposits.
b. Calculate the future worth of the deposits at the end of 5 years.

2. You take on your first job after graduation, and you decide to start saving right away for your
retirement. You put ₱5,000 per year into the company’s retirement plan, which averages 8%
interest per year. Three years later, you move to another job and start a new retirement plan.
You never get around to merging the funds in the two plans. If the first plan continued to earn
interest at the rate of 8% per year for 35 years after you stopped making contributions, how
much is the account worth?

3. A civil engineer plans to deposit ₱100,000 every year for 10 years into a retirement account,
but the first deposit will be made 5 years from now. If the account earns 8% compounded
annually, calculate the present worth and future value of the deposits.

4. With an interest rate of 15%, calculate the capitalized cost of a project with a ₱2,000,000.00
original cost and an extra ₱100,000.00 cost per 10 years. The yearly running cost will be
₱150,000.00. A substantial rework cost of ₱500,000.00 is also projected every 13 years.

5. The capitalized cost of a machine is ₱200,000. Its salvage value is ₱15,000 at the end of its
service life of 8 years. Given interest rate of 12% and assuming that the cost of perpetual
replacement remains constant, determine the original cost of the equipment.

6. An amortization of a debt is in the form of gradient series of P6,000 on the first year, P5,500
on the second year, P5,000 on the third year and P4,500 on the fourth year.
a. What is the equivalent present worth of the debt if interest is 7%?
b. What is the equivalent uniform periodic payment?

7. Engr. Juan, believing that life begins at 40, decided to retire and start enjoying life at age 40.
He wishes to have upon his retirement the sum of P2,500,000. On his 35th birthday, he
deposited a certain amount and increased his deposit by 20% each year until he will be 40. If
the money is deposited in a super savings account which earns 15% compounded annually,
how much was his initial deposit?

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