Activity for June 12, 2018

(in lieu of holiday)

CO1 1. From the 2 graphs below, prove that (10 pts)
2. What is the importance of studying Engineering Economics?
3. What are the 7 principles of Engineering Economics? Explain each
one through a practical application.
4. What is the difference between direct cost and indirect cost?
5. How is dividends and stocks affecting engineering economics?
6. ABC Corporation had an investment of $10,000 produces an annual
revenue of $5,310 for five years and then have a market value of
$2,000 at the end of year five. Annual expenses will be $3,000 at the
end of each year for operating and maintaining the project. Draw a
cash flow diagram for the five-year life of the project. Use the
corporation’s viewpoint.
7. You borrowed $15,000 from your credit union to purchase a used
car. The interest rate on your loan is 0.25% per month and you will
make a total of 18 monthly payments. Draw the cash flow diagram.
8. If a certain machine undergoes a major overhaul now, its output can
be increased by 20%- which translates into additional cash flow of
$20,000 at the end of each year for five years. Draw a cash flow
diagram for the five-year life of the project.
9. Charlie wishes to bequeath his youngest son P200,000 ten years
from now. What amount should he invest now if it will earn interest of
6% compounded annually during the first 5 years and 8% compounded
quarterly during the next 5 years?
10. An employee has a promissory note, due 5 years hence, whose
maturity value is P70,000. If the rate of interest is 12% compounded
semi-annually, what is the value of this note now?