ASSIGNMENT

Engineering Economy
1. If you borrowed money from your friend with simple interest of 12%, find the present worth of
P50,000 which is due at the end of 7 months
2. A deposit of P110,000 was made for 31 days. The net interest after deducting 20% withholding
tax is P890.36. Find the rate of return annually?
3. Mr. J. Dela Cruz borrowed money from a bank. He received from the bank P1,340 and promised
to pay P1,500 at the end of 9 months. Determine the bankers discount.
4. John borrowed P50,000 from the bank at 25% compounded semi-annually. What is the equivalent
effective rate of interest?
5. Find the present worth of a future payment of P300,000 to be made in 5 years with an interest rate
of 8% per annum.
6. How long will it take money to double itself if invested at 5% compounded annually?
7. Compute the equivalent rate of 6% compounded semi-annually to a rate compounded quarterly.
8. What is the present worth of two P100 payments at the end of the third year and fourth year? The
annual interest rate is 8%.
9. You need P4,000 per year for four years to go to college. Your father invested P5,000 in 7%
account for your education when you are born. If you withdraw P4,000 at the end of your 17 th ,
18th , 19th and 20th birthday, how much money will be left in the account at the end of the 21 st
year?
10. A bank is advertising a 9.5% account that yields 9.84% annually. How often is the interest
compounded?
11. A nominal interest of 3% compounded continuously is given on the account. What is the
accumulated amount of P10,000 after 10 years?
12. Compute the effective annual interest rate which is equivalent to 5% nominal annual interest
compounded continuously?
13. A man paid 10% down payment of P200,000 for a house and lot and agreed to pay the 90%
balance on monthly installments for 60 months at an interest rate of 15% compounded monthly.
Compute the amount of the monthly payment.
14. How much be deposited at 6% each year beginning on January 1, year 1 in order to accommodate
P5,000 on the date of the last deposit January 1, year 6?
15. Maintenance cost of an equipment isP20,000 after 2 years, P40,000 at the end of 4 years and
P80,000 at the end of 8 years. Compute for the semi-annual amount that be set aside for this
equipment. Money is worth 10% compounded annually.
16. The president of growing engineering firm wishes to give each of 50 employees a holiday bonus.
How much is needed to invest monthly for a year at 12% nominal interest rate compounded
monthly, so that each employees will receive a P1,000.
17. A machine is under considerations for investment. The cost of the machine is P25,000. Each year
it operates, the machine will generate a savings of P 15,000. Given an effective annual interest of
18%, what is the discounted payback period, in years, on the investment in the machine?
18. Engr. Sison borrows P100,000 at 10% interest compounded monthly. He must pay back the loan
over 30 years with uniform monthly payment due on the first day of each month. How much does
he pay each month?
19. A man wishes to have P35,000 when he retires 15 years from now. If he can expect to receive 4%
annual interest, how much must he set aside in each of 15 equal annual beginning of year
deposits?
20. If money is worth 5% compounded semi-annually , find the present value of a sequence of 12
semi-annual payments of P500 each, the first of which is due at the end of 4.5 years.
21. P600 is deposited each year into a savings bank account that pays 6% nominal interest
compounded continuously. How much will be the account at the end of 8 years?

22. A businessman borrowed P200,000 and agrees to pay P47,719.73 annually for x year at the rate
of 6% compounded continuously. Find the value of x.
23. A machine has an initial cost of P50,000 and a salvage value of P10,000 after 10 years What is
the book value after 5 years using a straight line method?
24. An engineer bought an equipment for P500,000. He spent an additional amount of P30,000 for
the installation and other expenses. The salvage value is 10% of the first cost. If the book value at
the end of 5 years will be P291,500 using straight line method, compute the useful life of the
equipment in years.
25. A unit of welding machine cost P45,000 with an estimated life of 5 years. Its salvage value
isP2,500. Solve for the depreciation using straight line method.
26. A unit of welding machine cost P45,000 with an estimated life of 5 years. Its salvage value is
P2,500. Assuming an interest rate of 8.5%, find the depreciation using sinking fund method.
27. A machine costs P80,000 and has an estimated salvage value of P20,000 at the end of its useful
life in 20 years. Compute the book value of the machine after two years using sum of the years
digit method.
28. A machine costing P720,000 is estimated to have a life of 10 years. If the annual rate of
depreciation is 25%, determine the total depreciation using a constant percentage of the declining
balance method.
29. A manufacturer produces certain items at a labor cost per unit of P315, material cost per unit is
P100, variable cost of P3 each. If the item has a selling price of P995, how many units must be
manufactured each month for the manufacturer to break even if the monthly overhead is
P461,600?
30. A company which manufacturers electric motors has production capacity of 200 motors a month.
The variable costs are P150. The average selling price of the motors is P275. Fixed costs of the
company amounts to P20,000 per month. The number of motors that must be sold each month to
break even is closest to?
31. It is the quantity of a certain commodity that is offered for sale at a certain price t a given place
and time.
32. A market whereby there is only one buyer of an item for which there are no goods substitute
33. It is the worth of a property as recorded in the book of an enterprise.
34. A condition where only few individuals produce certain product and that any action of one will
lead to almost the same action of the others.
35. Is the loss of value of equipment with use over a period of time? It could mean the difference in
value between the net asset and the used asset currently in service.
36. It is a series of equal payments occurring at equal intervals of time where the first payment is
made after several periods, after the beginning of the payment.
37. The difference between the book value and the actual lower resale value.
38. Money paid for the use of borrowed capital.
39. The length of time, usually in years, for the cumulative net annual profit to equal the initial
investment is called
40. A series of uniform amounts over a period of time.
41. Estimated value at the end of the useful life.
42. A type of annuity where the payments are made at the beginning of each period starting from the
first period.
43. A market situation wherein there is only one seller and one buyer.
44. This occurs when the prices of goods and services increase, causing a reduction in the purchasing
power of money
45. A series of equal payments which continues indefinitely.
46. Annual charges that is made for the maintenance of investment in wasting asset such as mines,
oil, gas wells.

47. It is defined to be any method of repaying a debt, the principal and interest included usually a
series of equal payments at periodic intervals of time.
48. A certain indebtedness of a corporation usually for a period of not less than 10 years and
guaranteed by a mortgage on certain assets of the corporation or its subsidiaries.
49. A long term notes which have no security behind them except a promise to pay.
50. The additional cost of producing one more unit.