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Problem Set

This document contains 20 engineering economics practice problems with the questions, solutions, and key details about interest rates, time periods, inflation rates, compounding frequencies, and future and present worth calculations. The problems cover a range of scenarios involving loans, investments, savings, and financial planning over various time horizons from 1 to 20 years with interest rates ranging from 5% to 15%.

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275 views2 pages

Problem Set

This document contains 20 engineering economics practice problems with the questions, solutions, and key details about interest rates, time periods, inflation rates, compounding frequencies, and future and present worth calculations. The problems cover a range of scenarios involving loans, investments, savings, and financial planning over various time horizons from 1 to 20 years with interest rates ranging from 5% to 15%.

Uploaded by

Renmark Viray
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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EE 29 – ENGINEERING ECONOMICS

Exercise No. 1

1. 6.6.

2.

7.

3.

8.
8.

4.

9.

5.
10.
11. 18. What is the present worth of the money now
which is equivalent to P120, 000 5 years from
now if the average inflation rate is 6% and
the nominal rate of interest is 10%.
P20, 583.19

19. During a recession, the price of goods and


services goes down because of low demand. A
12. company that makes adapters is planning to
expand its production facility at a cost of
P1,000,000 one year from now. However, a
contractor who needs work has offered to do
the job for P790, 000 if the company will do the
expansion now instead of 1 year from now. If
the interest rate is 15% per year, how much
does the company saves?
 P79, 565.2174

13. If P10, 000 becomes P18, 113.60 at the end of 20. To make CDs look more attractive than they
5 years when invested at an unknown really are, some banks advertise that their rates
nominal rate compounded bimonthly, are higher than their competitors ’ rates;
determine the nominal rate and its however, the fine print says that the rate is a
corresponding effective rate. simple interest rate. If a person deposits
 12%, 12.62% P10, 000 at 10% per year simple interest,
what compound interest rate would yield the
14. A person lends P2, 000 for five years at 10% same amount of money in 3 years?
per annum simple interest; then the entire 9.1% per year
proceeds invested for 10 years at 9%
compounded annually. How much money will
the person have at the end of the entire 15 year
period?
P7, 102.09

15. The parents planned for their son to receive


P50, 000 ten years from now. What amount
should they invest now if it will earn interest
of 12% compounded annually for the first 5
years and 13% compounded quarterly
during the next 5 years?
P14, 965.07

16. A man desires to have P30, 000 in a savings


account when he retires in 20 years. This
amount is equivalent to P30, 000 in today’s
purchasing power. If the expected average
inflation rate is 7% per year and the savings
account earns 5% what lump sum of money
should the man deposit now in his savings
account?
P12, 098.00

17. The future amount of P100, 000 for a period


of 8 years is equal to P341, 655.49,
considering money is worth 10% per year
with an inflation rate of “x” percent per
year. Find the value of “x”.
6%

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