F11-MidtermExam_261

F11-MidtermExam_261 - Surname _ Given Name_ UW ID Number_...

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Surname ____________________________ Given Name_________________ UW ID Number_________________ 1 MIDTERM EXAM MSci 261 Engineering Economics Fall 2011 Thursday, October 27, 7:00 – 9:00 p.m., RCH-301. Department of Management Sciences, Faculty of Engineering Instructor : David Fuller Aids Permitted : Non-communicating calculators only ( No cell phones, PDAs or computers). The formula sheet and interest tables are attached (detach them if you wish, as they need not be turned in). Time available : 2 hours. Instructions: Write in the spaces provided. If you need more space, use the blank page 12 or the back of a page, but be sure to write a note to the marker to indicate where your answer continues. This exam has 15 pages, with 9 questions on pages 3 to 11 , plus an extra blank page for your work, two pages of interest tables, and a formula sheet; check to make sure no pages are missing. Please put your name and UW ID number on this cover page, and UW ID number on every page. Show your work. Be sure to read the whole of each question and answer all parts. Several questions ask you to write an expression (or an equation) involving the given data, and interest factor symbols. Here is a list of allowed interest factor symbols for these expressions: (F/P,i,N), (P/F,i,N), (A/F,i,N), (F/A,i,N), (A/P,i,N), (P/A,i,N), (A/G,i,N) Note that (P/A,g,i,N) is NOT on the list ! When you calculate an interest rate, please display accuracy to one decimal place, e.g. “12.2% per year.” Grading: see next page
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UW ID Number ___________________________ 2 Problem Marks: 1 /8 2 /12 3 /8 4 /15 5 /11 6 /12 7 /11 8 /13 9 /10 Total /100
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UW ID Number ___________________________ 3 Problem 1. For each multiple choice question below, select the one correct response by circling the letter. 1.1 [2 marks] A present amount P is equivalent to an annuity series of N payments each of size A (with the first payment one period after P ), and both are equivalent to a future amount F at the same time as the N th payment in the annuity series. The interest rate is i , and i >0. (a) F = + + N N N i i i A ) 1 ( 1 ) 1 ( lim . (b) F < NA . (c) A = P/N + iP . (d) P > NA . (e) none of the above. 1.2 [2 marks] A company has two mutually exclusive proposed investments, labelled A and B. Proposal A has the larger first cost. Each proposal has a present worth greater than zero. Proposal B has a greater present worth. Internal rates of return have been calculated for each proposal, and for the incremental investment in A compared to B. (a)
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F11-MidtermExam_261 - Surname _ Given Name_ UW ID Number_...

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