FINTEST2-1

# FINTEST2-1 - Student Name 03 Exam Number ME353 Engineering...

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Unformatted text preview: Student Name 03. Exam Number ME353 Engineering Finance Second Midterm Exam, Fall 2006 Open Book You may use Excel, the ME353 website, the Excel add-ins and the course textbook. You may not use the Blackboard class site. You may not open ﬁles prepared before the exam. You may not communicate with others. The exam is presented in this document. To receive credit you must answer the questions in the spaces provided. Submit an Excel workbook through Blackboard when you are ﬁnished with the exam. Include a worksheet for each of the ﬁrst three problems. 1. (15 Points) A chicken farm receives delivery of young chickens on February 1. During the year, the chickens-lay eggs that are sold to grocery stores with revenues as recorded in the table. There arespikesinsales aroImd Easteﬂnd Christians. Food costs rise early in the year until the chickens are mature The initial costef the ﬂock of chickens is \$10,000, incurred On Feb. 1. The chickens are soldto asoupmﬂerforSZﬂOOatthe end ofDecember. All revenues and costs are expressed at the end of each month. During January, the farm is closed and there is no revenue or food cost. MonthCoﬁ Month Revenue Food Cost January 0 0 February \$1000 \$600 March 1000 700 April 6000 800 May 1000 900 June 1000 1000 July 1000 1000 August 1000 1000 September 1000 10(1) October 1000 1000 November 1000 1000 December 6000 1000 The farm expects similar costs and revenues each year. The owner has a minimal acceptable rate of return of 18% nominal annual interest. The interest is compounded monthly. a. Evaluate the single equivalent to one year’s operations. The time of the evaluation 15 to be at the beginning of January Equivalent value: 1670 b. Say the farm operates for two years with the same costs and revenues. What is the equivalent value of two years of operation? The time of the equivalency is Jan. 1 of the ﬁrst year. NPW = 1670 + 1670*(P/F, 1.5, 12) Equivalent value: 3066 £1,656”? 5p If” EXCH- ...
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