Homework 1
1. Revenue and cost are examples of cash inflows
2. Evaluation criteria is a basis used to select the best alternative
3. Three examples of intangible factors are goodwill, morale, convenience, friendship,
implementation know-how, aesthetics, a
5.1
An order of $7million foe seamless tubes was made by company X. if their AOC per year
is $860,000, how much annual revenue is required over a 3 year period inorder to recover the
initial investment and operating cost at an MARR of 15% per year.
AW = -
For an interest rate of 4% per 6months, determine the nominal interest rate per
a) Semiannual period: 0.04 * 1 = 0.04 per 6months
b) Year: 0.04 * 2 = 0.08 per year
c) Bi-annually: 0.04 * 4 = 0.16 per 2 years
What effective interest rate per year is equal
Home work 4 solutions
1. State two conditions under which the do nothing alternative is not an option.
o When it is absolutely required that one of the defined alternatives be selected (such as
for legal purposes)
o When each alternative has only cost cas
Homework 2
(From the 2 edition of Basics of Engineering Economy)
Sketch the cash flow diagram of all questions except 2.1 and the multiple choice questions
2.1 Find the correct numerical value for the following factors from the interest tables:
(a) (F/P,1
Thinking back to the business cycle discussion, how would
Keynesian economists explain the performance of the
economy during the last few years? Show graphically using
the AD/AS model, and explain your reasoning.
Next, how would neoclassical economists ex