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cee167-sp10-mt2-Cassidy-exam

cee167-sp10-mt2-Cassidy-exam - 3 Do not look at the other...

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1f . , L j CE 167: Engineering Project Management Spring 201 °NAME : Kctn ~ (a \f1I \ \ it WO\ ' ~ Problem 1 (10 points): Bonds The City of Berkeley wants to build an addition to Berkeley City College. To fund the project, they have decided to offer bonds. The project is expected to cost \$20 million. The city would like to fund 75% of the project with bonds. The city plans to selL15 _ , i lilQ 1 2ondsof equal value. r . ~ ~~ ~ 1.2. The bond rate is 8%, and the bonds will have quarterly coupons. The ci t y plans to build the project in 2020, so they elect to sell bonds that mature in 10 _ :Z ~~t:s.The citizens of Berkeley are very con1mitted to education, so all of the bonds sell within a month of being put on the market. Assuming the city has a U -m i ll ion a!"l:E. : tJ.~ l ~ _ ~ ~~et to pay their b ~ nd _ ho1 g ers . ,can they afford the payout each year (6 points)? - ----- g1. ~ j'Z1 u p B ( QV 1( 1f(t f IY) <-- - ?, ) A ~ I O OO ( (~} ~ 60 0 f - L ...- . ~ ' -- 1 5 J 0 00 hoicf e-rs ""'- I 2 ) ~ . J 000 7 I J ooo -- J oG -' o V - I ho 1 dU- ~ec v ( \ hOJ th e;~ ( C A nn ot C if~rJ P~j~ eCf~ / /
CE 167: Engineering Project Management Spring 2010 NAM E : \ (ClY\ 1~(f i W\\A yYO'~ Problem 2 (15 points): Benefit Cost Analysis Podunk University is considering adding a new science laboratory to their campus. They consider the following projects : Laboratory A Laboratory B Initial Cost \$70 million \$68 million Annual Operating & \$3 million \$5 million Maintenance Costs Annual Benefit \$12 . 5 million \$7 million Lifetime 20 years 20 years Salvage Value \$20 million \$5 million .

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cee167-sp10-mt2-Cassidy-exam - 3 Do not look at the other...

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