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ECOR3800 Midterm

# ECOR3800 Midterm - 1 Name Student_SOLUTIONS Carleton...

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1 Name & Student #__SOLUTIONS_________________________________________ Carleton University DEPARTMENT OF CIVIL & ENVIRONMENTAL ENGINEERING ECOR 3800A Engineering Economics October 22, 2008 TERM TEST 2008 1 Hour + 20 Minutes (a) Closed Book. (b) One 8.5”x11” single sided crib sheet is allowed. (c) Sheets of selected formulas and tables are provided. (d) Programmable calculators are not allowed. 1(a) A consulting company wants to start saving money for replacement of network servers. If the company invests \$4,000 at the end of year 1 and increases the amount invested by 5% per year for the following years, how much will be in the account 4 years from now if it earns interest at a rate of 8% per year? Solution Find P and then convert to F. P = 4000{1 [(1+0.05) 4 /(1+0.08) 4 }]}/(0.08 0.05) = 4000{ 3.552} = \$14,208.88 F = 14,208.88(F/P,8%,4) = 14,208.88(1.3605) = \$19,331.18 1(b) A soil testing company is interested in evaluating two equipment designs. The costs are shown below. Which should be selected at an interest rate of 8% per year? The need for testing equipment will continue in the foreseeable future. NOTE: You are expected to select the appropriate methodology to solve this problem.

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ECOR3800 Midterm - 1 Name Student_SOLUTIONS Carleton...

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