Solutions to EndofChapter Problems
Chapter 1
1.1 Engineering economy will help you pick the most economical alternative from the ones that have been identified. It will not help you identify what the alternatives are. 1.2 Revenues and costs are examples o

ISEN 302-502 Economic Analysis of Engineering Projects
Homework #3 Solution
1. [2.40 - 10 points] Case : i g
n P A1 1 i
First find Pg and then convert to F Pg = 8000[10/(1 + 0.10)] = $72,727 F = 72,727(F/P,10%,10) = 72,727(2.5937) = $188,632 2. [2.43 -

ISEN 302-502
Economic Analysis of Engineering Projects
12. Depreciation Method
Sung Ook Hwang
Review : Depreciation Terminology
First cost, B Total cost of
asset including purchase,
installation, fees, etc.
Book Value, BV
Remaining,
undepreciated
investm

ISEN 302-502
Economic Analysis of Engineering Projects
Chapter 13: After-tax Economic Analysis
Sung Ook Hwang
Review: Effect of Depreciation on After-tax Study
A few important points
Why accelerated depreciation rates and shortened recovery periods inclu

ISEN 302-502
Economic Analysis of Engineering Projects
Chapter 7. Benefit/Cost analysis and public sector projects
Sung Ook Hwang
Review: Benefit/Cost Analysis of a Single Project
Public Sector Projects
Public sector projects are owned, used and financed

ISEN 302-502: Economic Analysis of Engineering Projects
Practice problem (Chapter 3.)
1. Identify the following interest rate statement as either nominal or eective: (a) 1.3% per month compounded weekly; (b) 0.5% per week compounded weekly; (c) eective 15

ISEN 302-502
Economic Analysis of Engineering Projects
Chapter 13: After-tax Economic Analysis
Sung Ook Hwang
Income Tax Terminology
Taxable income (TI):
Taxes :
Effective tax rate (Te): The single-figure tax rate used in economic analyses
to estimate

ISEN 302-502: Economic Analysis of Engineering Projects
Practice Problem
Chapter 7. Benet/Cost Analysis.
1. Problem 7.21 from Chapter 7 (7.16, the rst edition). Use AW of all cash ows.
2. Problem 7.33 from Chapter 7 (7.28, the rst edition).
Chapter 12. De

2016 Fall ISEN3 02-5 04
Economic Analysis of Engineering Projects
Quiz0 1
Date: September 12, 2016
01:50 pm 02:05 pm (15 minutes)
Instructions:
0 Total three problems, and 15 points total.
0 Closed note, closed book.
. Calculator is allowed.
Show your Wor

; f.I_ns'truetionS-
Closed note closed book I
Caiculator is allowe' . - _
Show your work exphertly to'get fail/partial cred1t=f01_._aeh problem. . .
tthe end 'of this packet yo_11_.eai_1 see tablefm Time Vaiue. of Money Factors
Aggie ' Cod e offlioi

2016 Fall lSEN30250 l.
Economic Anaiysis of Engineering Projects
Quiz-03
Date: September 2!, 2016
01:50 pm m 02:05 pm (15 minutes)
instructions:
0 Total three problems, and 15 points total.
II Closed note, ciosed book.
0 Calculator is allowed.
0 Show your

ISEN CH1
Walmart was among the 1st to adopt EDI (Electronic Data Interchange) *allowing vendors to
directly track products bought by the customer. RFID sometimes used for real time tracking of
products through the supply chain.
4 Discount Cash Flow Rules

ISEN 302, Fall 2009
Homework XI I
Due: 12/07/09
1. 13.9
2. 13.10
3. 13.11
Guideline:
1. Please arrange your answer neatly; show every important step.
2. Identify what the P (present worth), F (future worth), A (annual worth), n, i, t, whenever
possible.
3

ISEN 302, Fall 2009
Homework X
1.
2.
3.
4.
5.
6.
7.
8.
Due: 11/25/09
10.10
10.15
10.17
10.29
10.33
10.38
10.46
10.47
Guideline:
1. Please arrange your answer neatly; show every important step.
2. Identify what the P (present worth), F (future worth), A (a

HW VII
Name:
_
UIN (last 5 digits): _
Problem: A project involves the cash flows shown below. a)
Plot the PW equation against the unknown IRR (i*) in the
range from 5% to 100%. Use a software (e.g. Excel) to do
the graph. b) Solve the PW equation for IRR

Homework #4 Solution
1. [3.32-10 points] Given interest rate = 12% per year compounded quarterly. If we acquire effective interest rate per a quarter, it belongs to the case 1. Given rate TP CP M 12% 1 year 1/4year TP/CP = 4 So, we can acquire the effecti

Homework #6 Solution
1. [4.9-10 points] Subscripts are C for contract service and B for Burling Coop installed. PWC = -75,000(P/A,6%,3) 100,000(P/A,6%,2)(P/F,6%,3) = -75,000(2.6730) 100,000(1.8334)(0.8396) = $- 354,407 PWB = -150,000 60,000(P/A,6%,5) = $-

NAME:_ [Problem 1] - (20 points)
ISEN 302
Tyler borrows $5000 loan. His repay it in 3 years at 10% interest per year. His payment plan is "Equal payments of compounded interest and principal made annually". 1) Fill out brackets. (10 points) End of year 0

Total Score
/50
1. Curry borrowed $ 20,000 from his senior for his project. After 3 years, he wants to pay it back. Suppose that interest rate is 1% per month. (30 points) a) Draw the cash flow diagram? (10 points)
b) How much curry pay back after 3 years

Chapter 5: Annual Worth Analysis
ISEN 302
Economic Analysis of
Engineering Project
ISEN302-Chapter 5
1
Purpose
Compare alternatives using an annual worth basis
Outline
Introduction
AW value calculations
Alternative evaluation using AW
AW of permanent

Chapter 5: Annual Worth Analysis
ISEN 302
Economic Analysis of
Engineering Project
ISEN302-Chapter 5
1
Purpose
Compare alternatives using an annual worth basis
Outline
Introduction
AW value calculations
Alternative evaluation using AW
AW of permanent

ISEN 302, Fall 2009
Homework I
Due: 09/09/09
1
2
3
4
5
6
7
8
9
1.14
1.19
1.22
1.36
1.38
1.45
You have the option of investing $2,500 at 7% simple interest or 6% compound
interest, both for four years. Which one would you choose?
If you wish to have $800 i

ISEN 302, Fall 2009
Homework IX
1.
2.
3.
4.
5.
Due: 11/18/09
7.5
7.14
7.16
7.26
Improvements to a national park will have a first cost of $600,000 and an annual
maintenance cost of $40,000. If overhauls costing $60,000 are done every five years, the
impro

ISEN 302, Fall 2009
Homework VIII
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Due: 11/04/09
6.4
6.10
6.24
6.28
6.39
6.47
6.51
6.62
$1000 Investment returns $402.11 annually for three years, show that it has an ROR
= 10%
Calculate the unpaid balance at the

ISEN 302, Fall 2009
Homework XI
1.
2.
3.
4.
5.
6.
7.
8.
9.
Due: 12/02/09
12.1 ( omit the expected salvage for 2 more years in b.)
12.6
12.9
12.10
12.11
12.19
12.31
12.38
12.44
Guideline:
1. Please arrange your answer neatly; show every important step.
2.

ISEN 302, Fall 2009
Homework VI
1.
2.
3.
4.
5.
6.
7.
Due: 10/28/09
5.2
5.9
5.13
5.15
5.17 (may using excel for calculation)
5.30
An investor plans to use his extra cash at hand to make some investment. He faces one
proposal by a start-up internet company.