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Engineering Economincs

Explores the principles of the financial aspects of engineering projects, enabling engineers to make informed decisions considering economic viability.

cost

benefit

investment

return

cash flow

interest

depreciation

inflation

rate of return

risk

break-even

sensitivity analysis

discounting

salvage value

opportunity cost

A man owes P12,000 today and agrees to discharge the debt by equal payments at the beginning of each 3 months for 8 years where these payments include all interest at 8% payable quarterly Find the quarterly payment

  • P501
  • P510
  • P500
  • P511

Find the present value in pesos of a perpetuity of P15,000 payable semi-annually if money is worth 8% compounded quarterly

  • P371,38736
  • P371,28736
  • P371,29736
  • P371,39736

What is the present worth of a P100 annuity starting at the end of the third year and continuing to the end of the fourth year, if the annual interest rate is 8%

  • P15289
  • P15633
  • P15344
  • P15499

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000 at the end of the period Compute the depreciation charge on the 10th year using declining balance method

  • d=P9, 23593;Cn=P60, 83280
  • d=P8, 98745;Cn=P60, 83280
  • d=P9, 45678;Cn=P67, 45698
  • d=P9, 23593;Cn=P59, 98734

Refer to the paragraph for the questions belowA cement grinding mill =E2=80=9CA=E2=80=9D with a capacity of 50 tons per hour utilizes forged steel grinding balls costing P12, 000 per ton, which have a wear rate of 100 grams per ton cement milled Another cement mill =E2=80=9CB=E2=80=9D of the same capacity uses high chrome steel grinding balls costing P50, 000 per ton with wear rate of 20 grams per ton cement milled Determine the more economical grinding mill, considering other factors to be the sameFor Mill A:

  • P50/hour
  • P60/hour
  • P65/hour
  • P55/hour

A certain machine costs 25M while its salvage value is 150,000 at the end of 8 years Determine its book value at the end of 4 years using the declining balance method if k =012

  • 1,449,238
  • 1,949,238
  • 1,994,238
  • 1,499,238

A suspension bridge was constructed for 24M The annual maintenance cost is P500 000 If the rate of interest is 6%, compute the capitalized cost of the bridge including maintenance

  • P31, 333, 33333
  • P33, 333, 33333
  • P32, 333, 33333
  • P30, 333, 33333

Mr Perez bought a second hand cellular phone and then sold it to Rudy at a profit of 40% Rudy then sold the phone to Noel at a profit of 20% If Noel paid P285600 more than it cost Mr Perez, how much did Mr Perezpay for the unit?

  • P425000
  • P435000
  • P430000
  • P420000

A local company assembling computer accessories produces 300 units per month at a cost of P800 per unit Each accessory sells for P1, 200 If the fixed costs are P20, 000, 000 per month, what is the break-even point?

  • To break-even: X = 48 units per month
  • To break-even: X = 50 units per month
  • To break-even: X = 55 units per month
  • To break-even: X = 53 units per month

A P50 00000 bond with a rate of 8% payable quarterly may be purchased for P47 50000 If it may be redeemed after eight years, determine the bond's yield to maturity

  • 928%
  • 916%
  • 926%
  • 918%

A proposed manufacturing plant will require a fixed capital investment of P8,000,000 and an estimated working capital of P1,500,000 Annual depreciation is estimated to be 8% of fixed capital investment If the annual profit is P2,000,000, determine the minimum payout period

  • Payout=368 years
  • Payout=358 years
  • Payout=378 years
  • Payout=388 years

An equipment costing P3, 015, 000 has an estimated life of 12 years with a salvage value of P200, 000 at the end of the period Compute the book value at the end of 7 years using sum of the year's digit method

  • C7=P 744,34615
  • C7=P 743,34615
  • C7=P 741,34615
  • C7=P 742,34615

A man wants to make 14% nominal interest compounded semi - annually on a bond investment How much should the man be willing to pay bow for a 12%, P10,000 bonds that will mature in 10 years and pays interest semi - annually?

  • P8, 94050
  • P3, 11805
  • P2, 58419
  • P86782

The president of a growing engineering firms wishes to give each of 50 employees holiday bonus How much is needed to invest monthly for a year at 12% nominal interest rate compounded monthly so that each employees will received a P1,000 bonus

  • P3,84244
  • P3,95244
  • P3,85244
  • P3,94244

The maintenance cost of an equipment is P15 00000 per year and its capitalized cost at 6% interest is P18M If the equipment has a salvage value of P30 00000 and has to be renewed at cost after 10 years, find its original cost

  • P700 24000
  • P701 24000
  • P70034000
  • P701 34000

A Mechanical Engineer who was awarded a P450 00000 contract to install the machineries of an oil mill failed to finish the work on time As provided for in the contract, he has to pay a daily penalty equivalent to one-fourth of one per cent per day for the first 10 days and 05% per day for the next 10 days and one per cent per day for everyday thereafter If the total penalty was P60 75000, how many days was the completion of the contract delayed?

  • 27 days
  • 25 days
  • 26 days
  • 28 days

A certain machine costs 25M while its salvage value is 150,000 at the end of 8 years Determine its book value at the end of 4 years using the Straight Line Method

  • 1,835,000
  • 1,385,000
  • 1, 825,000
  • 1,325,000

Mr Robles plans a deposit of P500 at the end of each month for 10 years at 12% annual interest, compounded monthly The amount that will be available in two years is?

  • P13,58673
  • P14,48673
  • P13,48673
  • P14,58673

How long will it take money to double itself if invested at 5% compounded annually?

  • 1421 years
  • 1441 years
  • 1431 years
  • 1411 years

Refer to the paragraph for the questions below A cement grinding mill with a capacity of 50 tons per hour utilizes forged steel grinding balls costing P12,000 per ton, which have a wear rate of 100 grams per ton cement milled Another cement mill of the same capacity uses high chrome steel grinding balls costing P50,000 per ton with wear rate of 20 grams per ton cement milled Determine the more economical grinding mill, considering other factors to be the sameFor Mill A:

  • P65/hour
  • P55/hour
  • P50/hour
  • P60/hour

A company issued 100 bonds of P1,000 face value each, redeemable at par at the end of 15 years to accumulate the funds required for redemption The firm established a sinking fund consisting of annual deposits, the interest rate of the fund being 4% What was the principal in the fund at the end of 12th year?

  • F=P75,241
  • F=P75,041
  • F=P75,141
  • F=P75,341

How many years will it take for an investment to triple itself if invested at the rate of 4% compounded annually?

  • 275 years
  • 285 years
  • 28 years
  • 27 years

Refer to the paragraph for the questions belowA cement grinding mill with a capacity of 50 tons per hour utilizes forged steel grinding balls costing P12, 000 per ton, which have a wear rate of 100 grams per ton cement milled Another cement mill =E2=80=9CB=E2=80=9D of the same capacity uses high chrome steel grinding balls costing P50, 000 per ton with wear rate of 20 grams per ton cement milled Determine the more economical grinding mill, considering other factors to be the sameFor Mill B:

  • P60/hour
  • P50/hour
  • P65/hour
  • P55/hour

An initial investment of P2,000,000 was put up for a new business that will produce an annual revenue of P1,250,000 for 5 years and will have a salvage value of P200,000 Annual expenses for its operation and maintenance will amount to P300, 000If money is worth 12%, show by computation if this business is profitable or not using ROR Method

  • 2433%
  • 2333%
  • 3333%
  • 3433%

Find the effective rate if interest is compounded quarterly at the nominal rate of 96% per annum

  • 985%
  • 988%
  • 995%
  • 998%

A P100000, 14% bond will mature in eight years If the interest is to be paid quarterly, find the price to realize a yield to maturity of 1255%

  • P112194
  • P111194
  • P113194
  • P110194

An initial investment of P20,000,000 was put up for a new business that will produce an annual revenue of P12, 000,000 for 15 years and will have a salvage value of P2, 000,000 Annual expenses for its operation and maintenance will amount to P6, 000, 000If money is worth 12%, show by computation if this business is profitable or not using ROR Method

  • 2461%
  • 2411%

How many years will it take for an investment to doubleitself if invested at the rate of 4% compounded annually?

  • 18 years
  • 19 years
  • 195 years
  • 185 years

Determine the ordinary simple interest on P5,000 for the period from January 15 to June 20, 1993, if the rate of simple interest is 14%

  • P33333
  • P31333
  • P32333
  • P30333

How much must be invested in order to have 10, 000 at the end of 10 years if interest is paid at 6% per annum compounded annually?

  • 5,58395
  • 5,57395
  • 5,59395
  • 5,56395

Compute the equivalent rate of 6% semi - annually to a rate compounded quarterly

  • r=576%
  • r=586%
  • r=596%
  • r=566%

A machine costing P45, 000 is estimated to have a salvage value of P4, 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 %?

  • 3325%
  • 3225%
  • 3425%
  • 3525%

An equipment costing P3, 015, 000 has an estimated life of 12 years with a salvage value of P200, 000 at the end of the period Compute the book value at the end of 7 years using Declining Book Balance method

  • C7=P 609,132
  • C7=P 639,132
  • C7=P 629,132
  • C7=P 619,132

A farmer bought a tractor costing P25,000 payable in 10 semi annual payments, each installment payable at the beginning of each period If the rate of interest is 26% compounded semi-annually, determine the amount of each installment

  • P4,11720
  • P4,01720
  • P4,17720
  • P4,07720

An item is purchased for P100 00000 Annual costs are P18 00000 Using 8%, what is the capitalized cost of perpetual service?

  • P345, 000
  • P325, 000
  • P335, 000
  • P355, 000

A one bagger concrete mixer can be purchase with a down payment of P8,000 and equal installment of P600 each paid at the end of every month for the next 12 months If money is worth 12% compounded monthly, determine the equivalent cash price of the mixer

  • P14,85305
  • P14,78305
  • P14,75305
  • P14,88305

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000 at the end of the period Compute the book value after 10 years using sinking fund method assuming i=8%

  • Cn=P132, 62260
  • Cn=P125, 66667
  • Cn=P138, 56760
  • Cn=P103, 33330

A contractor can purchase a dump truck for P850, 000 It is estimated that if sold at the end of 7 years it will have a value of P100, 000 Its estimated annual maintenance cost is P12, 000 and daily operating expenses are estimated to be P320 including the wage of the driver It is also possible to hire a similar unit for P1200 a day, including fuel cost If money is worth 10%, how many days a year must the dump truck be used to justify the purchase of the truck

  • N = 20006 days
  • N = 21106 days
  • N = 21006 days
  • N = 20106 days

Refer to the paragraph for the questions belowA cement grinding mill with a capacity of 50 tons per hour utilizes forged steel grinding balls costing P12, 000 per ton, which have a wear rate of 100 grams per ton cement milled Another cement mill =E2=80=9CB=E2=80=9D of the same capacity uses high chrome steel grinding balls costing P50, 000 per ton with wear rate of 20 grams per ton cement milled Determine the more economical grinding mill, considering other factors to be the sameSelection:

  • Therefore, Mill B is as economical as Mill A
  • No answer
  • Therefore, Mill A is more economical than Mill B
  • Therefore, Mill B is more economical than Mill A

A company has a production capacity of 500 units per month and its fixed costs are P250,000 a month The variable costs per unit are P1, 150 and each unit can be sold for P2,000 Economy measures are instituted to reduce the fixed costs by 10 per cent and the variable costs by 20 per cent Determine the new break-even point

  • To break-even (new): x = 198 units per month
  • To break-even (new): x = 218 units per month
  • To break-even (new): x = 208 units per month
  • To break-even (new): x = 188 units per month

At certain interest rate compounded quarterly, P1,000 will amount to P4500 in 15 years What is the amount at the end of 10 years?

  • P2,72570
  • P2,82570
  • P2,62570
  • P2,52570

A plant produces 300 units of auto air conditioners a month at P3, 600 each A unit sells for P4, 800 The fixed cost of production is P120, 000 a monthWhat is the break-even point?

  • To break-even: X =100 units per month
  • To break-even: X =115 units per month
  • To break-even: X =105 units per month
  • To break-even: X =110 units per month

A P500000, 8% bond that pays interest semi-annually will mature in seven years Determine the price to realize a yield to maturity of 10%

  • P4,86110
  • P4,66110
  • P4,76110
  • P4,56110

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000 at the end of the period Compute the depreciation charge on its 10th year using sinking fund method assuming

  • d = P7, 56750
  • d = P8, 10250
  • d = P6, 68667
  • d = P8, 11250

An asset is purchased for P500, 00000 The salvage value in 25 years is P100,00000 What is the total depreciation in the first three years using straight - line method?

  • P48, 00000
  • P32, 00000
  • P16, 00000
  • P24, 00000

Francisco invested P300 00000 with 15% return in an electronic shop and 8% return in real estate His annual income from his investments is P40 00000 How much did he invest in the electronics shop?

  • P230 57143
  • P226 57143
  • P232 57143
  • P228 57143

Find the amount at the end of 8 years if 1, 000 is invested at 6% per annum compounded quarterly

  • 1,60032
  • 1,63032
  • 1,62032
  • 1,64032

The ore of a gold mine in the Mountain Province contains, on the average, 05 gram of gold per ton Method A of processing cost P1,650 per ton and recovers 93% of the gold while Method B costs only P1,500 per ton and recovers 81% of the gold If gold can be sold at P8,500 per gram, how much will be the net profit for method B?

  • The net income of Method B is P1,74250
  • The net income of Method B is P1,94250
  • The net income of Method B is P1,85250
  • The net income of Method B is P1,75250

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000 at the end of the period Compute the depreciation charge and its book value after 10 years using straight - line method

  • Cn=P105, 66667
  • Cn=P103, 66667
  • Cn=P103, 33330
  • Cn=P105, 33330

The ore of a gold mine in the Mountain Province contains, on the average, 05 gram of gold per ton Method A of processing cost P1,650 per ton and recovers 93% of the gold while Method B costs only P1,500 per ton and recovers 81% of the gold If gold can be sold at P8,500 per gram, how much will be the net profit for method A?

  • The net income of Method A is P2,31250
  • The net income of Method A is P2,30250
  • The net income of Method A is P2,41250
  • The net income of Method A is P2,40250

A man paid P110,000 for a P100,000 bonds that pays P4000 per year In 20 years, the bond will be redeemed for P105,000 What net rate of interest will the man obtain on his investment?

  • 356%
  • 347%
  • 337%
  • 340%

Find the compound amount and interest if P2, 500 is invested at 8% compounded quarterly for 5 years and 6 months

  • P387495
  • P388495
  • P385495
  • P386495

A man will deposit P200 with savings and loan association at the beginning of each 3 months for 9 years If the association pays interest at the rate of 55% compounded quarterly, find the sum to his credit just after the last deposit

  • P93, 73000
  • P93, 75000
  • P93, 65000
  • P93, 63000

An equipment costing P250, 000 has an estimated life of 15 years with a book value of P30, 000 at the end of the period Compute the book value after 10 years using declining balance method

  • Cn=P59, 98734
  • Cn=P61, 97580
  • Cn=P60, 83280
  • Cn=P67, 45698

A P20 00000 bond is sold now for P18 50000 Determine the redemption price at the end of seven years, if the yield is 12% semi-annually and the rate is 10% payable every six months

  • P20,86166
  • P20,11166
  • P20,81166
  • P20,76166

A man invest P10,000 now for the college education of his 2 year old son If the fund earns 14% effective, how much will the son get each year starting from his 18th to the 22th birthday?

  • P20, 79664
  • P20, 79164
  • P20, 78164
  • P20, 78664

A lathe for a machine shop cost P60,000 if paid in cash On the installment plan, a purchaser should pay P20,000 down payment and 10 quarterly installment, first due at the end of the first year after compounded quarterly Determine the quarterly installment

  • P5,43918
  • P5,58918
  • P5,48918
  • P5,53918

A Company purchased an asset for P10, 00000 and plans to keep it for 20 years If the salvage value is zero at the end of the 20th year, what is the depreciation in the third year? Use sum - of - the - years digit deprecation

  • P85700
  • P100000
  • P74700
  • P93700

A compressor can be purchased with a down payment of 8, 000 and equal installments of 600 each paid at the end of every month for the next 12 months If money is worth 12% compounded monthly, determine the equivalent cash price of the compressor

  • 14,74305
  • 14,77305
  • 14,75305
  • 14,76305

An asset is purchased for P120, 00000 Its estimated economic life is 10 years, after which it will be sold for P12, 00000 Find the depreciation for the first year using the sum - of - the - year's digit, (SYD)

  • P19,63600
  • P18,40000
  • P21,08000
  • P20,00000

The cost of producing a small gadget consists of P2500 for labor and P4000 for materials The fixed charges in operating the plant are P125, 000 per month The variable cost is P150 per unit The gadget can be sold for P8500 each Determine how many gadgets must be produced per month to break-even

  • To break-even: X = 6,667 sets
  • To break-even: X = 6,757 sets
  • To break-even: X = 6,657 sets
  • To break-even: X = 6,767 sets

A P100,000, 6% bond, pays dividend semi - annually and will be redeemed at 110% on July 1, 1996, to yield an investor 4%, compounded semi - annually

  • P100, 00000
  • P112, 78665
  • P114, 48114
  • P113, 45698

Refer to the paragraph below to answer the questionAn industrial engineer has designed two alternative methods of accomplishing a production job Both methods involve the acquisition of the same working place and other capital equipment to be used for this job only Method A calls for a crew consisting of three men each costing P30000 per hour This method will result in the production of 10 units per hour of which two will be rejectsMethod B calls for a crew of two men each costing P3500 per hour and should result in the production of eight units per hour of which one will be rejectThe cost of the direct material lost in each reject is P2000 If a certain total number of units is to be produced, find which method is more economicalMethod A:

  • Per unit cost =1625
  • Per unit cost =1825
  • Per unit cost =1525
  • Per unit cost =1925

Find the amount at the end of 8 years if 1, 000 is invested at 6% per annum compounded monthly

  • 1,61414
  • 1,63414
  • 1,60414
  • 1,62414

Determine the present worth of an annual payment of P2, 50000 at the end of each year for 12 years at 8% compounded annually

  • P18, 840
  • P17, 546
  • P15, 000
  • P30, 000

A man is left with an inheritance from his father He has an option to receive P2 M at the end of 10 years; however he wishes to receive the money at the end of each year for 5 years If interest rate is 8%, how much would he receive every year?

  • P352, 53300
  • P200, 00000
  • P232, 02000
  • P400, 00000

A man wants to make 14% nominal interest compounded semi-annually on a bond investment How should the man be willing to pay now for a 12% - P10, 00000 bond that will mature in 10 years and pays interest semi-annually

  • P893060
  • P894060
  • P895060
  • P896060

A machine part to be machined may be made either from an alloy of aluminum or steel There is an order for 8000 units Steel costs P380 per kg while aluminum costs P870 per kg If steel is used, the steel per unit weighs 110grams, for aluminum, 30 grams When steel is used, 50 units can be produced per hour, for aluminum, 80 units per hour with aid of tool costing P640, which will be useless after the 8,000 units are finished The cost of the machine and the operator is P1080 per hour How much is the cost per unit if aluminum is used?

  • The total cost of alloy of aluminum is P0676/unit
  • The total cost of alloy of aluminum is P0376/unit
  • The total cost of alloy of aluminum is P0476/unit
  • The total cost of alloy of aluminum is P0576/unit

A manufacturing firm maintains one product assembly line to produce signal generators Weekly demand for the generators is 35 units The line operates for seven hours per day, five days per week What is the maximum production time per unit in hours required of the line to meet the demand?

  • 15 hours per unit
  • 25 hours per unit
  • 1 hour per unit
  • 2 hours per unit

A community wishes to purchase an existing utility valued at P500,000 by selling 5% bonds that will mature In 30 years The money to retire the bond will be raised by paying equal annual amounts into a sinking fund that will earn 4% What will be the total annual cost of the bonds until they mature?

  • P44, 66798
  • P33, 91505
  • P34, 51505
  • P37, 34578

A P10,00000 bond with a rate of 10% payable annually is to be redeemed at par value after five years Determine the selling price to yield 8%

  • P10,69854
  • P10,59854
  • P10,89854
  • P10,79854

A machine part to be machined may be made either from an alloy of aluminum or steel There is an order for 8000 units Steel costs P380 per kg while aluminum costs P870 per kg If steel is used, the steel per unit weighs 110grams, for aluminum, 30 grams When steel is used, 50 units can be produced per hour, for aluminum, 80 units per hour with aid of tool costing P640, which will be useless after the 8,000 units are finished The cost of the machine and the operator is P1080 per hour How much is the cost per unit if steel is used?

  • The total cost of steel is P0634/unit
  • The total cost of steel is P0534/unit
  • The total cost of steel is P0834/unit
  • The total cost of steel is P0734/unit

A man expects to receive P25, 000 in 8 years How much is that money worth now considering interest at 8% compounded quarterly

  • P13, 26583
  • P13, 28583
  • P13, 27583
  • P13, 25583

A proposed manufacturing plant will require a fixed capital investment of P8,000,000 and an estimated working capital of P1,500,000 Annual depreciation is estimated to be 8% of fixed capital investment If the annual profit is P2,000,000, determine the rate of return on the total investment and minimum payout period

  • Rate of Return (ROR)=2095%>8%
  • Rate of Return (ROR)=2115%>8%
  • Rate of Return (ROR)=2085%>8%
  • Rate of Return (ROR)=2105%>8%

Refer to the paragraph below to answer the questionAn executive receives an annual salary of P600, 000 and his secretary a salary of P180, 000 A certain task can be performed by the executive working alone in four hours If he delegates the task to his secretary wit will require him 30 minutes to explain the work a d another 45 minutes to check the work Due to the unfamiliarity of the secretary to do the task, it takes her an additional time of 6 hours after being instructed Considering salary cost only, determine the cost of performing the task by each method, if the secretary works 2400 hours a year and the executive 3000 hours a yearCost of performing the task:Secretary working with executive

  • P63750
  • P73750
  • P93750
  • P83750

A man decided to paint his house himself after office hours He can paint 25sqm per hr on the average It takes him 15mins to prepare his materials after painting If there are 900sqm to be painted, how long it will take him it paint his house if he devotes 25hrs each day

  • 195 days
  • 185 days
  • 1975 days
  • 1875 days

Find the present worth of a future payment of P80, 000 to be made in six years with an interest of 12% compounded annually

  • P = 40, 58039
  • P = 40, 43039
  • P = 40, 53039
  • P = 40, 48039

An initial investment of P4, 000, 000 was put up for a new business that will produce an annual revenue of P2, 500, 000 for 5 years and will have a salvage value of P400, 000 Annual expenses for its operation and maintenance will amount to P600, 000Taxes and maintenance will cost 4% of the initial cost If money is worth 12%, show by computation if this business is profitable or not using ROR Method

  • 2378% > 20% justified
  • 2458% > 20% justified
  • 2358 > 20%; justified
  • 2478% > 20% justified

Refer to the paragraph for the questions belowA cement grinding mill =E2=80=9CA=E2=80=9D with a capacity of 50 tons per hour utilizes forged steel grinding balls costing P12, 000 per ton, which have a wear rate of 100 grams per ton cement milled Another cement mill =E2=80=9CB=E2=80=9D of the same capacity uses high chrome steel grinding balls costing P50, 000 per ton with wear rate of 20 grams per ton cement milled Determine the more economical grinding mill, considering other factors to be the sameFor Mill B:

  • P55/hour
  • P60/hour
  • P65/hour
  • P50/hour
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