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    Quiz - PW, FW, AW

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    John A. Ceniza
    This document contains instructions and questions for an exam consisting of 4 problems: 1. The first problem asks the student to use the present worth method to evaluate whether a small office building should install a retrofitted space-heating system costing $110,000 that would save $30,000 per year for 6 years. 2. The second problem asks the student to calculate: (a) the price that should be paid for a $5,000 face value bond paying 8% interest annually over 20 years to receive a 10% yield, and (b) the annual yield if the bond is purchased for $4,600. 3. The third problem asks the student to calculate the total annual cost of

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    Quiz - PW, FW, AW

    Uploaded by

    John A. Ceniza
    774 views1 page
    This document contains instructions and questions for an exam consisting of 4 problems: 1. The first problem asks the student to use the present worth method to evaluate whether a small office building should install a retrofitted space-heating system costing $110,000 that would save $30,000 per year for 6 years. 2. The second problem asks the student to calculate: (a) the price that should be paid for a $5,000 face value bond paying 8% interest annually over 20 years to receive a 10% yield, and (b) the annual yield if the bond is purchased for $4,600. 3. The third problem asks the student to calculate the total annual cost of

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    Engineering economy quiz

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    This document contains instructions and questions for an exam consisting of 4 problems: 1. The first problem asks the student to use the present worth method to evaluate whether a small office building should install a retrofitted space-heating system costing $110,000 that would save $30,000 per year for 6 years. 2. The second problem asks the student to calculate: (a) the price that should be paid for a $5,000 face value bond paying 8% interest annually over 20 years to receive a 10% yield, and (b) the annual yield if the bond is purchased for $4,600. 3. The third problem asks the student to calculate the total annual cost of

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    774 views1 page

    Quiz - PW, FW, AW

    Uploaded by

    John A. Ceniza
    This document contains instructions and questions for an exam consisting of 4 problems: 1. The first problem asks the student to use the present worth method to evaluate whether a small office building should install a retrofitted space-heating system costing $110,000 that would save $30,000 per year for 6 years. 2. The second problem asks the student to calculate: (a) the price that should be paid for a $5,000 face value bond paying 8% interest annually over 20 years to receive a 10% yield, and (b) the annual yield if the bond is purchased for $4,600. 3. The third problem asks the student to calculate the total annual cost of

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    Instructions:

    a. This exam paper consists of (4) four questions. Deadline: 12-15-2020, 12noon via gmail
    thru class representative.
    b. For problem-solving type questions, show your solutions by attaching your answers in
    pdf, doc and word file. BOX your final answers with signature.
    c.

    Name: ______________________________ Date/Section:_____________

    1. A retrofitted space-heating system is being considered for a small office


    building. The system can be purchased and installed for $110,000, and it
    will save an estimated 300,000 kilowatt-hours (kWh) of electric power each
    year over a six-year period. A kilowatt-hour of electricity costs $0.10, and
    the company uses a MARR of 15% per year in its economic evaluations of
    refurbished systems. The market value of the system will be $8,000 at the end
    of six years, and additional annual operating and maintenance expenses are
    negligible. Use the PW method to determine whether this system should be
    installed.
    2. A bond with a face value of $5,000 pays interest of 8% per year. This bond will be
    redeemed at par value at the end of its 20-year life, and the first interest payment
    is due one year from now. (a) How much should be paid now for this bond in order to
    receive a yield of 10% per year on the investment? (b) If this bond is purchased now for
    $4,600, what annual yield would the buyer receive?
    3. A certain barangay wishes to purchase a certain equipment which be used in its
    beautification program valued at P 400,000 by selling bond worth 5% that will mature in
    30 years. The amount to retire the bonds will be raised by paying equal annual amounts
    into a sinking fund that will earned 4%. What will be the total annual cost of the bond until
    they mature. Assume that the bonds can be sold at par and redeemable year.
    4. You purchased a building five years ago for $100,000. Its annual maintenance expense has
    been $5,000 per year. At the end of three years, you spent $9,000 on roof repairs. At the
    end of five years (now), you sell the building for $120,000. During the period of ownership,
    you rented out the building for $10,000 per year paid at the beginning of each year. Use
    the AW method to evaluate this investment when your MARR is 8% per year.

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