OFFICE OF THE COLLEGE OF ENGINEERING
MIDTERM EXAMINATION
ENGINEERING ECONOMICS
Name: _________________________________ Section: ______________ Date: __________
Directions: Analyze and answer the following problems. Show your solutions manually, strictly no CALTECH SOLUTIONS.
1.(10 points) PICE wishes to set up a Scholarship Foundation by making uniform end of period semi-annual deposits of P5,000 for 20 years. The
fund is to provide the foundation 5 equal end of year withdrawals starting at the end of the 16th year. At 8% compounded semi-annually, find the
uniform amount to be withdrawn.
2.(10 points) A secondhand motorcycle can be purchased by 5 end-of-month payments. The first payment would be P5,000 an would increase by
P500 every payment. Should the buyer opt to pay it at once rather by installment, how much would it cost him if money is worth 6% compounded
quarterly?
3.(10 points) An investor deposits P10,000 at the end of each year in an account which gives a nominal annual interest of 5%, compounded
continuously. How much sum will be accumulated in 10 years?
4.(10 points) A man paid 10% as down payment of P200,000 for a house and lot and agreed to pay the balance on monthly installments for 5 years
at an interest rate of 15%, compounded monthly. What was the monthly installment in pesos?
5.(10 points) If P500 is deposited in an account at the beginning of each year for 6 years at an annual interest rate of 7%, how much can be
withdrawn after 6 years?
6.(10 points) Mr. Santos wishes to provide P5000 for his son on his 21st birthday. How much should he deposit every 6 months in a savings bank
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which pays 4% converted semi-annually, if the first deposit is made when the son is 3 years old?
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7.(10 points) Ms. Molina borrowed P350,000 from a lending institution which will be paid after 10 years. At an interest rate of 15% compounded
annually. If money is worth 10% per annum, how much should be deposited to a bank monthly in order to discharge his depths 10 years hence?
8.(10 points) Operating and repair costs for some equipment will be P15,000 per year for the 3-year warranty period. Beginning in year 4, costs will
climb by P2500 per year. The equipment will be retired after 10 years. Find the present worth of these costs if the firm’s interest rate is 12%.
9. (10 points) Slick Oil Company is considering the purchase of a new machine that will last 5 years and cost P50,000; maintenance will cost P6,000
the first year, decreasing by P1,000 each year to P2,000 the fifth year. If the interest rate is 8% per year, compounded annually, how much money
should the company set aside for this machine?
10.(10 points) If money is worth 9%, find the present value of a perpetuity of P120,500 payable at the beginning of each year.
11.(10 points) A company is planning to expand its operations and plans to purchase a parcel of land on which to construct a building for their
review center, which they will need 5 years hence. The current costs are: land P2M; building P3.5M. Since these are not needed immediately, the
company plans to defer the purchase of the land and the construction of the building until they are needed. If the value of the land and the
construction of the building are expected to appreciate at the rates of 10% and 8% per annum, what will be the total cost of the investment after 5
years?
12.(10 points) Juwita buys a two-year-old Honda from a car dealer for P450,000. She puts P150,000 down and finances the rest through the dealer
at 13% effective interest rate. If she agrees to make 36 monthly payments, find the size of each payment.
ANSWER KEY;
1.P80, 730.60
2.P29,532.95
3.P126,528
4.P42,822
5.P3,827
6. P51.55
7.P6,913.86
8. P113,594.72
9.P66,584
10. P1,459,388.89
11. P8,363,668.27
12.P9,998.71
