IEOR
UC Berkeley
Dr. Donatella Taurasi
Principles of Engineering Economics
Problem Set 1
You may submit your solution to the homework as an excel/word file or you may write out
your solutions by hand and submit a scanned pdf. Your solutions must be clearl

PROBLEMS:
Please do the following problems:
<Problem 1#Using the assumptions in part (a) of Problem 8_5
(assuming there is no cannibalization),
a. Calculate HomeNets net working capital requirements (that is,
reproduce Table 8.4 under the assumptions in P

E120
Homework 4
Due 10/03/2014
03/16/2015
1. A 30-year bond with a face value $1000 has a coupon rate of 5.5%, with semiannual
payments.
(a) What is the coupon payment for this bond?
(b) Draw the cash ows for the bond on a timeline.
2. Assume that a bond

Fall 2008 Engineering 120
Industrial Engineering & Operations Research
September 28, 2008, 2008 Page 1 of 2
Homework #5
Due: October 6 Monday, at the beginning of the lecture 1. Metallica Bearings, Inc., is a young start-up company. No dividends w

E 120
Homework 6 solutions
1. There are at least a couple of ways to go about this problem.
(a) To get an expected return of 0.10, we must invest i M l in the market
_ [2M 0.150.05 _ 2
portfolio, and 1 3% = % in the bank.
The return of the portfolio is R

E 120 - Spring 2015
Midterm 1 Solution
1. (a) Initial wealth
D = 75
Optimal consumption in period 0
G = 100
Optimal investment into projects
D H = 15
Optimal amount to borrow from the capital market
G + (D H) D = G H = 25
(b) We know D is the initial weal

E120
Homework 5 Solutions
1. First, we estimate the equity cost of capital:
rE=Div1/Po+g=5/100+0=0.05=5%
Next, we analyze the new policy:
Divl = Dividend Payout rate - Earnings per share = 0.80 - 5 = 4
g = Earnings grth rate = retention rate - return on n

E 1 20
Homework 4 Solutions
1. Pays 5'39" = 2.75% of $1,000 every six months, i.e. $27.5 per coupon.
Let me know if you need help with drawing the cash ow.
2. (a) Maturity of bond is 10 years.
(b) Coupon rate is % = 2% for 6 months, or 4% per year.
(0)

E120
Homework 2 Solutions
3
1.
1000(1 1/(1 + 7%)100
7%
= 14269.25
PV =
2.
1
(1 + 8%)5i
PV =
i=1
=
1
(1 + 8%)5 1
= 2.13
i.e., the present value of your gift is $2.13 million.
3. (a) The cash ow is (0, 1200, 1200, . . . , 1200), where n = 18.
The amount I h

E120
Homework 3
2
Due 09/26/2014
02/23/2015
1. What is the present value of $1000 paid at the end of each of the next 100 years if the
interest rate is 7% per year?
2. You are the head of the Schwartz Family Endowment for the Arts. You have decided
to fun

*
Student Name: Giscielle Carlisa
Student ID: 24722703
E 120 Fall 2013 NLG
Assignment 1, Due September 11, 2013
*
<1_1# The most important difference between corporations and other
organization form is that a corporation is a legally defined,
artificial b

9/7/16
Appendix: The price of Risk
Risky vs. risk-free cash flows
Arbitrage with transactions costs
Table 3A.1 Cash flows and Market
Prices (in $) of a Risk-Free Bond and
an Investment in the Market
Portfolio
Risky Versus Risk-free Cash Flows
Assume t

Data Case 2
I used the data from Marketwatch instead of Morningstar. Therefore, a lot of the ratios may not
make sense to you. I have taken this into consideration when grading the data cases. There may
also be mistakes in the solution, you are welcome to

IEOR
UC Berkeley
Dr. Donatella Taurasi
Principles of Engineering Economics
Spring 2016
Problem Set 2
Interest Rates and Bond Valuation
You may submit your solution to the homework as an excel/word file or you may write out
your solutions by hand and submi

IEOR
UC Berkeley
Dr. Donatella Taurasi
Principles of Engineering Economics
Spring 2016
Problem Set 4 - Portfolio Choice and the CAPM
You may submit your solution to the homework as an excel/word file or you may write out
your solutions by hand and submit

IEOR
UC Berkeley
Dr. Donatella Taurasi
Principles of Engineering Economics
Problem Set 3
Capital Budgeting
You may submit your solution to the homework as an excel/word file or you may write out
your solutions by hand and submit a scanned pdf. Your soluti

E120: Principles of Engineering Economics
Spring 2015
Topics per class:
Date
Jan. W 21
Jan. M 26
Jan. W 28
Feb. M 02
# Class
1
2
3
4
Feb. W 04
5
Feb. M 09
6
Feb. W 11
7
Feb. W 18
Feb. M 23
8
Feb. W 25
Mar. M 02
9
10
Mar. W 04
Mar. M 09
Mar. W 11
11
12
13

E120
Homework 1
Due Friday 02/13/2015
09/12/2014
1. Calculate the future value of $2000 in
(a) 5 years at an interest rate of 5% per year.
(b) 10 years at an interest rate of 5% per year.
(c) 5 years at an interest rate of 10% per year.
(d) Why is the amo

E120
Homework 5
Due 04/20/2015
1. A company expects to have earnings per share of $5 in the coming year. The ﬁrm plans to
pay out all of its earnings as a dividend. With these expectations of no growth, the ﬁrm’s
share price is $100. Suppose the ﬁrm could

E120
Homework 6
Due 05/04/2015
(at noon, at my ofﬁce)
1. Suppose the risk-free asset has expected return of 0.05, and the market portfolio has
expected return 0.15 and standard deviation 0.18. What is the minimum standard
deviation you can achieve if you

E 120 Fall 2013 NLG
Assignment 3, Due September 27, 2013
*
PLEASE ENTER YOUR ANSWERS BELOW, AFTER THE '#' AND BEFORE THE
'/>. YOU MAY ADD AS MANY PARAGRAPH BREAKS AS YOU WISH
<5_1#a. 20%/4=5%, b. 20%/2=10%, c. 20%/24=8.3% />
<5_2#a. $1*(1+5%)^3=$1.157, $1

Consumers theory
Rational behavior of preferences
Notation:
Let A and B be two any situations. Then:
A B: is read as A is preferred to B
B A: is read as B is preferred to A
A = B: is read as A is equally preferred to B
A B : is read as A is at least as a

Midterm 2 Solutions
March 18, 2015
1
.
105
(a) IRR is y that solves 0 = 100+ 1+y , so IRR of project C is y = 105 1 = 5%.
100
Since IRR(C) < capital cost, then NPV < 0 and IRR rule says to reject
project c.
(b) Since the projects are not replicable, we ju

8/29/16
Eng. 120
Engineering Economics
Today
Key Topics
Ch.1
Finish ch.1 and start ch.2
Assignments:
Online problem set (MFL) due weds.
No data lab (bcourses) due this week.
control of corporations
the stock market
Ch.2
Financial statements
Rem

9/19/16
Eng. 120
Engineering Economics
Today
Finish up: Retirement (and some investing.)
Not in text but could be on the test.
Start ch. 5.
Outline
Basics of retirement savings
A video!
The power of compounding
Note: this lecture Ill just use brute

Engineering 120: Principles of
Engineering Economics
February 12, 2014:
Instructor: Nicholas Gunther
Office Hours: Monday: 2-4 PM
Office: 4175 Etcheverry
GSIs: Sin Man Choi, Yang Wang
Reader: Ruoyun Li
Text:
Jonathan Berk and Peter Demarzo
Corporate Finan

Engineering 120: Principles of
Engineering Economics
February 5, 2014:
Instructor: Nicholas Gunther
Office Hours: Monday: 2-4 PM
Office: 4175 Etcheverry
GSIs: Sin Man Choi, Yang Wang
Reader: Ruoyun Li
Text:
Jonathan Berk and Peter Demarzo
Corporate Financ