057:014 Engineering Economy
Engineering Economy NAME ___________________
Quiz #3 Date: February 14, 2003
♥♥♥♥♥♥♥
1) The Present Worth of the costs of a car lease, over 3 years, is $17,112.54. The alternative of a car loan involves an upfront payment of $4,000 and a monthly payment of $711 over 36 months. Show, using shorthand economic form, what is the minimum value of the used car that you could obtain in year 3 that would still make a loan preferable to a lease. Assume i = 12% per year
[pic]
a) What is the main advantage of using payback for evaluating a project?
It is simple.
b) What are the main drawbacks to using payback for evaluating a project?
1) No consideration of timing
2) No consideration of cashflow after breakeven point
c) What is the Internal Rate of Return for a project, expressed in terms of the Present Worth?
[pic]
2)
A proposed project has the following cash flows for each year:
|0 |1 |2 |3 |4 |
|-200,000 |+34,000 |+40,000 |+100,000 |+120,000 |
a) Calculate the Present Worth when MARR = 0%. Do not use shorthand economic form!
[pic]
= 94,000
PW = -200,000+34,000+40,000+100,000+120,000
b) Calculate the Future Worth at Year 4 (use shorthand economic form!)
[pic]
[pic]
c) The maintenance for the new Trans-Pacific road tunnel will cost $11 million per year. What is the Capitalized Equivalent Cost, assuming an interest rate of 10%
[pic]=110,000,000
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
Related searches
- international economy tracking
- international economy magazine
- international economy business news
- government role in economy macroeconomics
- business economy news
- business economy articles
- which type of economy would you choose
- economy international shipping
- maine s economy today
- fedex freight economy tracking
- new york state economy ranking
- blue economy articles