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    A) What Is The Effective Interest Rate Per Payment Period (I B) Compute The Monthly Payment

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    Tamara al bittar
    The document contains a final exam for an engineering economics course. It consists of 5 problems related to capital budgeting techniques: 1) Calculating the effective interest rate and monthly payment for an automobile loan. 2) Performing an annual equivalent worth analysis to select between two machines for an automated candy bar wrapping process. 3) Using incremental rate of return analysis to select between 4 alternatives. 4) Determining the operating and maintenance costs for an alternative to yield an incremental cash flow rate of return of 20%. 5) Using incremental rate of return analysis to select between two machines, given their costs, benefits, salvage values, and service lives.

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    A) What Is The Effective Interest Rate Per Payment Period (I B) Compute The Monthly Payment

    Uploaded by

    Tamara al bittar
    11 views2 pages
    The document contains a final exam for an engineering economics course. It consists of 5 problems related to capital budgeting techniques: 1) Calculating the effective interest rate and monthly payment for an automobile loan. 2) Performing an annual equivalent worth analysis to select between two machines for an automated candy bar wrapping process. 3) Using incremental rate of return analysis to select between 4 alternatives. 4) Determining the operating and maintenance costs for an alternative to yield an incremental cash flow rate of return of 20%. 5) Using incremental rate of return analysis to select between two machines, given their costs, benefits, salvage values, and service lives.

    Original Description:

    midterm EC

    Original Title

    EC-Final_2015

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    The document contains a final exam for an engineering economics course. It consists of 5 problems related to capital budgeting techniques: 1) Calculating the effective interest rate and monthly payment for an automobile loan. 2) Performing an annual equivalent worth analysis to select between two machines for an automated candy bar wrapping process. 3) Using incremental rate of return analysis to select between 4 alternatives. 4) Determining the operating and maintenance costs for an alternative to yield an incremental cash flow rate of return of 20%. 5) Using incremental rate of return analysis to select between two machines, given their costs, benefits, salvage values, and service lives.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    11 views2 pages

    A) What Is The Effective Interest Rate Per Payment Period (I B) Compute The Monthly Payment

    Uploaded by

    Tamara al bittar
    The document contains a final exam for an engineering economics course. It consists of 5 problems related to capital budgeting techniques: 1) Calculating the effective interest rate and monthly payment for an automobile loan. 2) Performing an annual equivalent worth analysis to select between two machines for an automated candy bar wrapping process. 3) Using incremental rate of return analysis to select between 4 alternatives. 4) Determining the operating and maintenance costs for an alternative to yield an incremental cash flow rate of return of 20%. 5) Using incremental rate of return analysis to select between two machines, given their costs, benefits, salvage values, and service lives.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    LEBANESE Dept.

    : Civil engineering
    UNIVERSITY Semester : 5
    ENGINEERING Date : 9 June 2015
    FACULTY Prof. : Dr T. Al-Bittar
    BRANCH I
    Documents Forbidden Duration : 1h:30min
    Final Exam

    ENGINEERING ECONOMICS

    Problem 1: (15 Points)


    You are considering purchasing a used automobile. The price is $12 345. You are able to
    make a $2345 down payment. The balance, $10 000, will be borrowed from your bank at an
    interest rate of 8.48% compounded daily. The loan should be paid in 36 equal monthly
    payments.

    a) What is the effective interest rate per payment period (iq)?


    b) Compute the monthly payment.

    Problem 2: (25 Points)


    The machines shown below are under consideration for an improvement to an automated
    candy bar wrapping process. Determine which should be selected on the basis of an annual
    equivalent-worth (AE) analysis using an interest rate of 15% per year as MARR.

    Machine A Machine B

    Initial Cost, $ 40 000 65 000

    Annual operating cost, $/year 10 000 12 000

    Salvage value, $ 12 000 25 000

    Service life, years 3 6

    Problem 3: (20 Points)


    Consider the following four alternatives:

    A B C D

    Initial Cost $5000 $3000 $7000 $6000

    Uniform annual net income $3000 $1700 $4150 $3200

    Each alternative has a 2-year useful life. Using the incremental rate of return analysis with a
    MARR of 10%, determine which alternative should be selected.

    Problem 4: (20 Points)


    Alternative A has an initial investment cost of $100 000, annual O&M costs of $50 000, and
    a $20 000 salvage value after 5 years.

    Alternative B has an initial investment cost of $175 000 and a $40 000 salvage value after 5
    years, but its annual M&O costs are unknown (say X).

    Determine the O&M costs for alternative B that would yield an incremental cash flow rate of
    return (RoR) of 20% per year.

    Problem 5: (20 Points)

    Machine A Machine B

    Initial Cost, $ 6700 16 900

    Annual operating and maintenance cost, $/year 1500 1200

    Annual benefits 4000 4500

    Salvage value, $ 1000 3500

    Service life, years 3 6

    Use incremental rate of return analysis to decide which machine to purchase. MARR = 8%.
    Note that at the end of service life for Machine A, the same machine was bought at the same
    price.

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