Chapter 1 Engineering Economic Decisions

Page | 1 Chapter 1 Engineering Economic Decisions 1.1) Not provided For The Wall Street Journal, go to the Front page to find the section on “What’s News.” This is a section on a brief summary on major headlines of the day’s news. Quickly browse through the news summary to see if there is any news related to business investment. The best places to find the major business news on investment are sections on “BUSINESS”, “MARKETS” or “TECH.” 1.2) Not provided

Some of the well-known business publications are:

•Daily Newspapers:

oThe Wall Street Journal oThe New York Times (Business Section) oFinancial Times

•Weekly or Monthly Magazines:

oBusinessWeek oForbes oMoney oSmart Money oFortune Fundamentals of Engineering Economics 3e (International Edition) by Chan Park (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) 1 / 4

Page | 1

Chapter 2: Time Value of Money

2.1) ( ) 0.08 5000 3 $1200I iP N= =   = 2.2) int (1 )

10000 5000(1 0.06 )

1 16.67 0.06 int (1 )

10000 5000(1 0.05)

log 2 14.20 log(1 0.05) N N Simple erest F P iN N N years Compound erest F P i Nyears =+

= + 

== =+ =+ == +

2.3)  

15 int ()

8,000(0.08 15) $9600

int

(1 ) 8,000 (1 0.08) 1 $17377.35

N Simple erest I iN P I Compound erest I P i P =

=  =

= + − = + − =

2.4)  

10 int ()

5,000(0.08 10) $4000

int

(1 ) 5,000 (1 0.07) 1 $4,835.75

N Simple erest I iN P I Compound erest I P i P =

=  =

= + − = + − = 2 / 4

2

 

 

1

( / , , ) 4000( / , 5%, 5) 4000 1.2763 $5105.20

2

• ( )

$56804, 000 1 (0.06 7)

1.2 Alternative F P F P i N F P Alternative F P iN F Alternative is better than alternative

= = =  =

=+

= +  =

2.6) End of Period (Year) Principal Payment ($) Interest Payment ($) Remaining Balance ($)

0 0 0 8000

1 1364 640 6636

2 1473.12 530.88 5,162.88

3 1590.97 413.03 3571.91

4 1718.25 285.76 1853.67

5 1855.70 148.3 -2.03

2.7) ( / , , ) 15,000( / ,0.06,7) 15,000 0.6651 $9976.5P F P F i N P F= = =  =

2.8) ( / , , ) 75,000( / ,0.09,3) 75,000 1.2950 $97125F P F P i N F P= = =  =

2.9) $1501 :

$168.34200 0.8417( / , 9%, 2)2 :

250 0.6499 $162.47( / , 9%, 5)3 :

2 Alternative P F P FAlternative P F P FAlternative P Alternative is preferred =

===

===

2.10) ( / ,7%,5) 10000 1.4026 $14,026F P F P= =  =

2.11) ( / ,6%,10) 800 0.5584 $446.72P F P F= =  =

2.12) ( / ,9%,2) 1.1881

1 0.1583 15.83%

1.1881

F P F P P

P Discount P ==



= − = =





.

2.5) 3 / 4

3 (a) F = P(F / P, 7%, 6) = 5000 1.5007 = $7503.5 (b)

F = P(F / P, 6%, 8) = 13000 1.5938 = $20, 719.4

(c)

F = P(F / P,10%, 25) = 16000 10.8347 = $1, 73,

355.2 (d ) F = P(F / P, 5%,10) = 10000 1.6289 = $16, 289

( ) ( / ,6%,8) 6000 0.6274 $3764.4

( ) ( / ,10%,6) 10000 0.5645 $5645

( ) ( / ,7%,8) 12000 0.5820 $6984

( ) ( / ,9%,10) 18000 0.4224 $7603.2

a P F P F b P F P F c P F P F d P F P F

= =  =

= =  =

= =  =

= =  =

2.15) ( ) ( / ,10%,5) 20000 0.6209 $12,418

( ) ( / ,10%,5) 12000 1.6105 $19,326

a P F P F b F P F P

= =  =

= =  =

2.16) 4 (1 0.12)

log 4 16.08 log1.09 N PP N years =+ ==

2.17) 3 (1 0.12)

log3 16.23 log1.07 N PP N years =+ ==

2.18) 2 (1 0.12)

log 2 6.11 log1.12 72 72, 6 12 N PP N years From theruleof number of years =+ == ==

2.19) ( )

281

( / ,6%,281) 5 1 0.06 $64553254.69F P P F= = + =

2.20) 20000( / ,12%,2) 55000( / ,12%,4) $50896.5P P F P F= + =

2.21) $450,000( / ,5%,5) 450,000(0.7835) $352,575P P F= = =

.

2.13) 2.14)

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