ENGT 3701 Savannah State University Engineering Economy Questions
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ENGT 3701 Engineering Economy
Assignment 1
Given 1/18/2022 Due 1/27/2022
Multiple Choice Choose the correct answer (4 qts x 5 pts) = 20 points
Submit it at andreous@savannahstate.edu
The first 2 problems are from chapter 1 and the other 2 problems are from chapter 2.
1) A manufacturing firm has received a contract to assemble 1000 units of test equipment in
the next year. The firm must decide how to organize its assembly operation.
a) Skilled workers, at $33 per hour each, can individually assemble the test equipment in
2.6 hours per unit.
b) Teams of 4 less skilled workers, at $19 per hour each, can assemble a unit in one
hour.
The approach that is more economical is
i)
ii)
iii)
iv)
a
b
both a and b are equal in cost
not enough information is given to decide
2) If you rent a car with a 16-gallon tank, you can a) return it with a full gas tank, b) return it
without filling it and pay $5.45/gallon or c) accept a fixed price of $50 for gas .The local
price is $3.95/gallon for gasoline, and you expect this car to get 28 miles per gallon. If
you expect to drive 300 miles, the best choice is
i)
ii)
iii)
iv)
c
not enough information is given to decide
b
a
3) John is a manufacturing engineer with the Miller Company and he has determined the
following costs of producing a new product
Equipment cost: $288,000/year
Equipment salvage value at end of year 5 = $41,000
Variable cost per unit of production: $14.55
Overhead cost per year: $48,300
If the Miller Company uses a 5-year planning horizon and the product can be sold for a
unit price of $39.75, the number of units that can be produced and sold to break even is
i)
ii)
iii)
iv)
30,212
45,933
65,099
68,353
4) A retirement community unit charges $6,000/month for a single senior citizen to reside in
an efficiency apartment with assisted living care. The facility has operating expenses of
$600,000 per month. Staffing levels are dependent on the number of residents. Each
senior who enters the community requires additional food, personal care and support staff
time. The estimated cost for each person is $4,000 per person per month. The companys
annual profit or loss if it maintains an average residency level of 350 senior citizens is
i)
ii)
iii)
iv)
$1,200,000 profit
$1,200,000 loss
$1,500,000 loss
$1,500,000 profit
ENGT 3701 Engineering Economy
Assignment 2
Given 1/27/2022 Due 2/3/2022
Multiple Choice Choose the correct answer (5 qts x 4 pts) = 20 points
Submit it at andreous@savannahstate.edu
Questions 1, 2 and 3 are related to the following situation: James and Jennifer are organizing an
event and they are thinking of chartering a bus to take people. They are providing transportation, tickets
to the event, and refreshments on the bus. They predicted the following expenses: Bus rental $80, Event
ticket $12.5 per person, Gas expense $75, Refreshments $ 7.5 per person, Other fuels $20, and Bus driver
$50. They believe that they could attract 30 people at $35 per ticket.
1) The total fixed costs and total variable costs are
i)
ii)
iii)
iv)
$225, $20
$245, $20
$225, $245
$260, $225
2) Their total profit or loss is
i)
ii)
iii)
iv)
$250
-$250
$225
-$225
3) The number of people that they need to attract to break even is
i)
30
ii)
15
iii)
25
iv)
20
Chapter 3 problems:
1) How long will it take for an investment to double at a 3% per year if using the compound
interest rate?
i)
ii)
iii)
iv)
11.89 years
16.67 years
23.45 years
33.3 years
2) What sum of money now is equivalent to $8,250 two years later, if interest is 4% per 6month period?
i)
ii)
iii)
iv)
$9,651.33
$7,052.13
$7,334.22
$9,280.13
ENGT 3701 Engineering Economy
Assignment 3
Given 2/3/2022 Due 2/10/2022
Multiple Choice Choose the correct answer (5 qts x 4 pts) = 20 points
Submit it at andreous@savannahstate.edu
1) Suppose that $4,000 is deposited in an account that earns 5% interest. How much is in the
account after 10 years
i)
ii)
iii)
iv)
$6,155.85
$8,000.00
$6,205.31
$6,515.58
2) The effective interest rate per year for a credit card charging 1.5% interest every month is
i)
ii)
iii)
iv)
19.56 %
18.00 %
43.50 %
11.96%
3) Rita borrows $5,000 from her parents. She repays them $6,000. What is the interest rate
if she pays the $6,000 at the end of year 10?
i)
ii)
iii)
iv)
1.20%
18.40%
1.84%
12.00%
4) What interest rate, compounded quarterly, is equivalent to a 9.31% effective interest rate?
i)
ii)
iii)
iv)
9.00% / year
10.00% / year
11.31% / year
9.31% / year
5) An engineer invested $5,000 in the stock market. For the first 6 years the average
return was 9% annually, and then it averaged 3% for 4 years. How much
approximately is in the account after 10 years?
i) $8,442
ii) $9,438
iii) $14,015
iv) $12,015
ENGT 3701 Engineering Economy
Assignment 4
Given 2/10/2022 Due 2/17/2022
Multiple Choice Choose the correct answer (5 qts x 4 pts) = 20 points
Submit it at andreous@savannahstate.edu
1) Suppose a bank account pays 12% interest compounded monthly. If you decide to
deposit $50 at the end of every month into the account, the amount of money you will
have in the account after 5 years is
i)
ii)
iii)
iv)
$4083.49
$4038.94
$2247.75
$2427.57
2) You are 25 years old now and have just started work. When you retire at age 60, you
want to have $1,000,000 in the bank. The amount of money you must save each year,
starting one year from now, if the interest rate is 10% a year is
i)
ii)
iii)
iv)
$4070
$3700
$5070
$2700
3) For what value of n, based on a 3.5% interest rate, does the following cash flow has a
present value of $0.0 where C = P = $1000 and A = $50?
i)
ii)
iii)
iv)
35
25
45
55
4) A man buys a car for $18,000 with no money down. He pays for the car in 30 equal
monthly payments with interest at 12% per annum, compounded monthly. What is his
monthly loan payment?
i)
ii)
iii)
iv)
$600.00
$744.60
$558.45
$696.60
5) A manufacturing firm spends $500,000 annually for a required safety inspection
procedure on its production lines. A new monitoring technology would enable the
company to eliminate the need for such inspection. If the interest rate is 10% per year,
how much can the company afford to spend on this new technology? The company wants
to recover its investment in 15 years.
i)
ii)
iii)
iv)
$0.75 million
$2.639 million
$3.803 million
$2.088 million
ENGT 3701 Engineering Economy
Assignment 5
Given 2/17/2022 Due 2/24/2022
Multiple Choice Choose the correct answer (5 qts x 4 pts) = 20 points
Submit it at andreous@savannahstate.edu
All Questions are pertaining to the following situation:
The following two cash flows Cash Flow (A) and Cash Flow (B) are economically equivalent.
The effective interest rate is 10% per period. Please follow the questions to find out the unknown
X.
Cash Flow (A)
A = $2,000
0
1
2
3
4
5
6
7
8
Cash Flow (B)
X
0
X/3
X/3
X/3
1
2
3
4
X
5
9
$5,000
X
6
7
8
9
1) The present equivalent value PA of Cash Flow (A) is
i)
ii)
iii)
iv)
$15,909
$11,990
$11,518
$15,118
2) Cash Flow (B) can be decomposed into _______ basic components.
i)
ii)
iii)
iv)
7
3
2
4
3) A correct expression for the present equivalent value PB of Cash Flow (B) is
i)
ii)
iii)
iv)
PB = X/3(P|A, 10%,3) + X(P|A, 10%,3) (P|F, 10%,3) + 5000(P|F, 10%,9)
PB = X/3(P|A, 10%,3) + X(P|A, 10%,3) + X(P|F, 10%,3) + 5000(P|F,
10%,9)
PB = (X/3 + X)(P|A, 10%,3) (P|F, 10%,3) + 5000(P|F, 10%,9)
PB = X/3(P|A, 10%,1) + X/3(P|A, 10%,2) + X/3(P|A, 10%,3)
+ X(P|A, 10%,4) + X(P|A, 10%,5) + X(P|A, 10%,6) + 5000(P|F, 10%,9)
4) The correct equation of PB with respect to X is
i)
ii)
iii)
iv)
PB = 1.697483 X + 212.5
PB = 1.697483 X + 2120.5
PB = 2.697483 X + 212.5
PB = 2.697483 X + 2120.5
5) Since Cash Flow (A) and Cash Flow (B) are economically equivalent, the correct value
of X is
i)
ii)
iii)
iv)
3658.928
5111.822
3483.803
4818.574
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