Tutorial Classes
1.
In which of the following problems do you need engineering economy?
(a) To compare a 4-year and a 5-year car loan.
(b) To decide whether a new or a used car is cheaper.
(c) To decide whether to pay your car insurance quarterly or annua

Tutorial Class 8 Answer
1.
What is the rate of return for the following project? It costs $300,000 to start and
returns $45,000 the first year, with a $5,000 increase each year thereafter. The
project lasts 10 years.
Answer
PW = 0 = -300K + 45K(P/A, i, 10

Tutorial Class 8
1.
What is the rate of return for the following project? It costs $300,000 to start and
returns $45,000 the first year, with a $5,000 increase each year thereafter. The
project lasts 10 years.
2.
One share of Festival Cruise Line stock in

Tutorial Class 9 - Answer
1.
Use PWs to calculate the benefit/cost ratio at i = 5%. For a highway project. The
first cost is $150K, and O&M costs are $5K per year. There is no salvage value
after 20 years. Time savings to users are worth $35K per year, an

Tutorial Class 9
1.
Use PWs to calculate the benefit/cost ratio at i = 5%. For a highway project. The
first cost is $150K, and O&M costs are $5K per year. There is no salvage value
after 20 years. Time savings to users are worth $35K per year, and neighbo

Tutorial Class 10 - Answer
1.
Flincham Fine Paints can buy new painting equipment for $10,000. Its useful life
is 5 years, after which it can be sold for $2000. Estimated annual costs are $1000,
and it should save Flincham $3000 per year. If Flinchams MAR

Tutorial Class 10
1.
Flincham Fine Paints can buy new painting equipment for $10,000. Its useful life
is 5 years, after which it can be sold for $2000. Estimated annual costs are $1000,
and it should save Flincham $3000 per year. If Flinchams MARR is 6%,

Tutorial Class 11 - Answer
1.
A machine that has been used for 1 year has a salvage value of $10,000 now,
which will drop by $2000 per year. The maintenance costs for the next 4 years are
$1250, $1450, $1750, and $2250. Determine the marginal cost to exte

Tutorial Class 11
1.
A machine that has been used for 1 year has a salvage value of $10,000 now,
which will drop by $2000 per year. The maintenance costs for the next 4 years are
$1250, $1450, $1750, and $2250. Determine the marginal cost to extend servic

Tutorial class 5 - Answer
1.
Creekside Engineering will pay $24,000 per year for errors and omissions liability
insurance. What is the present worth of the coverage for 10 years? The interest
rate is 9%.
Answer
PW = -24K * (P/A. 9%, 10) (1+i)
= -24K * 6.4

Tutorial Class 9
1.
Calculate the benefit/cost ratio at i = 5%. For a highway project. The first cost is
$150K, and O&M costs are $5K per year. There is no salvage value after 20 years.
Time savings to users are worth $35K per year, and neighborhood disru

Tutorial Class 9 - Answer
1.
Calculate the benefit/cost ratio at i = 5%. For a highway project. The first cost is
$150K, and O&M costs are $5K per year. There is no salvage value after 20 years.
Time savings to users are worth $35K per year, and neighborh

Tutorial Class 7 - Answer
1.
Burke Brake Shoes may buy a new milling machine. The industrial engineer has
asked for your recommendation on the test alternative. What is the IRR? If Burke
requires a return of 8%, what do you recommend?
First cost
$15,500
O

Tutorial Classes
1.
In which of the following problems do you need engineering economy?
(a) To compare a 4-year and a 5-year car loan.
(b) To decide whether a new or a used car is cheaper.
(c) To decide whether to pay your car insurance quarterly or annua

Tutorial Class 2
1.
Joe Miner has $3000 in his savings account from an inheritance 10 years ago. If
the savings account pays interest annually at a rate of 5%, how much was
deposited?
2.
Susan Cardinal Deposited $500 in her savings account, and 6 years la

Tutorial Class 2
1.
Joe Miner has $3000 in his savings account from an inheritance 10 years ago. If
the savings account pays interest annually at a rate of 5%, how much was
deposited?
Answer
P = $3000 / (1+0.05)10 = $1842.
2.
Susan Cardinal Deposited $500

Tutorial Class 3- Answer
1.
Mary Tipton is buying an auto that costs $12,000. She will pay $2000
immediately and the remaining $10,000 in four annual end-of-year principal
payments of $2500 each. In addition to the $2500, she must pay 15% interest on
the

Tutorial Class 3
1.
Mary Tipton is buying an auto that costs $12,000. She will pay $2000
immediately and the remaining $10,000 in four annual end-of-year principal
payments of $2500 each. In addition to the $2500, she must pay 15% interest on
the unpaid b

Tutorial Class 3a- Answer
1.
Perfect Temp is a mechanical engineering design firm that specialized in heating
and cooling systems for factories and warehouses. What is the clients cash flow
diagram for the following costs and savings of an air-to-air heat

Tutorial Class 3a
1.
Perfect Temp is a mechanical engineering design firm that specialized in heating
and cooling systems for factories and warehouses. What is the clients cash flow
diagram for the following costs and savings of an air-to-air heat exchang

Tutorial class 4
1.
New Tech has asked three banks for a loan of $15,000. Each bank has its own rate
and compounding interval, but each loan would be paid back by a single, lumpsum payment of principal and interest at the end of 5 years. Which loan has th

Tutorial class 5 - Answer
1.
Creekside Engineering will pay $24,000 per year for errors and omissions liability
insurance. What is the present worth of the coverage for 10 years? The interest
rate is 9%.
Answer
PW = -24K * (P/A. 9%, 10) (1+i)
= -24K * 6.4

Tutorial Class 6 - Answer
1.
0.75%
N
48
Determine the down payment that must be made on an automobile that cost
$20,000 if payments are limited to $375 per month for 48 months at 9% interest.
F/P
1.431
End-of-period compound interest factors
P/F
A/P
P/A
A