ADDITIONAL PROBLEMS ENGINEERING ECONOMY

1. P500,000 was deposited 20.15 years ago at an interest rate of 7% compounded semi-annually. How much
is the sum now?
A. 1.2 M
B. 1.8 M
C. 2.0 M*
D. 2.3 M

2. An engineer bought an equipment for P500,000. He spent and additional amount of P30,000 for instalment
and other expenses. The estimated useful life of the equipment is 10 years. The salvage value is x% of the
first cost. Using the straight line method of depreciation, the book value at the end of years will be P291,500.
What is the value of x?
A. 5
B. 10*
C. 15
D. 6

3. A man inherited a regular endowment of P100,000 every end of 3 months for x years. However, he may
choose to get a single lump of P3,702,939.8 at the end of 4 years. If the rate of interest was 14%
compounded quarterly, what is the value of x?
A. 7
B. 8
C. 9
D. 10*

4. How long will it take money to quadruple if it earns 7% compounded semi-annually?

A. 16.15 years
B. 20.15 years*
C. 23.15 years
D. 26.15 years

5. A man paid a 10% downpayment of P200,000 for a house & lot and agreed to pay the balance on monthly
instalments for 5 years at an interest rate of 15% compounded monthly. What was the monthly instalment in
pesos?
A. P32,128.87
B. P42,821.87*
C. P34,812.67
D. P43,781.67

6. An investor pays P1,100,000 for a mine which will yield a net income of P200,000 at the end of each year for
10 years and then will become useless. He accumulates a replacement fund to recover his capital by annual
investments at 4.5%. At what rate does he receive interest on his investment at the end of each year?
A. 10.04%*
B. 11.04%
C. 12.04%
D. 13.04%

7. P200,000 was deposited at an interest rate of 24% compounded semi-annually. After how many years will
the sum ne P621,170?
A. 3
B. 4
C. 5*
D. 6

8. A machine costing P720,000 is estimated to have a book value of P40,545.73 when retired at the end of 10
years. Depreciation cost is computed using a constant percentage of the declining book value. What is the
annual rate of depreciation in %?
A. 10%
B. 15%
C. 20%
D. 25%*
9. Find the present value, in pesos, of a perpetuity of P15,000 payable semi-annually if money is worth 8%
compounded quarterly.
A. 371,287 (semi-annually)*
B. 413,333 (semi-annually)
C. 168,434 (semi-annually)
D. 284,112 (semi-annually)

10. A machine costing P45,000 is estimated to have a salvage value of P4,350 when retired at the end of 6
years. Depreciation cost is computed using a constant percentage of the declining book value. What is the
annual rate of depreciation in %?
A. 12.25%
B. 17.25%
C. 22.25%
D. 32.25%*

11. P200,000 was deposited on Jan. 1, 2008 at an interest rate of 24% compounded semi-annually. How much
would the sum be on Jan. 1, 2013?
A. 421,170
B. 521,170
C. 621,170*
D. 721,170

12. A service car whose car price was P540,000 was bought with a down-payment of P162,000 and monthly
instalments of P10,874.29 for 5 years. What was the rate of interest if compounded monthly?
A. 8.1%
B. 12.0%
C. 16.7%
D. 24.0%*

13. A man inherited a regular endowment of P100,000 every end of 3 months for 10 years. However he may
choose to get a single lump sum payment at the end of 4 years. How much is this lump sum if the cost of
money is 14% compounded quarterly?
A. 3,702,939.73*
B. 4,702,939.73
C. 5,702,939.73
D. 6,702,939.73

14. At 6% find the capitalized cost of a bridge whose cost is P250M and life is 20 years, if the bridge must
partially rebuilt at a cost of P100M at the end of each 20 years.
A. 295 M*
B. 325 M
C. 355 M
D. 385 M

15. If P500,000 is deposited at a rate of 11.25% compounded monthly, determine the compounded interest after
7 years and 9 months.
A. P490,849
B. P590,849
C. P690,849*
D. P390,849

16. A deposit of P110 was made for 31 days. The net interest after deducting 20% withholding tax is P890.36.
Find the rate of return annually.
A. 10.14%
B. 11.75%*
C. 12.26%
D. 13.08%

17. A corporation uses a type of motor truck which cost P5000 with life 2 years and final salvage value of P800.
How much could the corporation afford to pay for another type of truck of the same purpose whose life is 3
years with a final salvage value of P1000. Money is worth 4%.
A. P3,588.37
B. P4,221.37
C. P6,047.37
D. P7,164.37*

18. The cost of the equipment is P500,000 and the cost of installation is P30,000. If the salvage value is 10% of
the cost of equipment at the end of 5 years, determine the book value at the end of the fourth year using
straight line method.
A. P125,000
B. P132,500
C. P146,000*
D. P142,500

19. A man loans P187,400 from a bank with interest at 5% compounded annually. He agrees to pay his
obligations by paying 8 equal annual payments, the first being due at the end of 10 years. Find the annual
payments.
A. P33,375
B. P44,982*
C. P38,426
D. P42,679

20. A manufacturer produces certain items at a labor cost of P115 each, material cost of P76 and variable cost
of P2.32 each. If the item has a unit price of P600, how many number of units must be manufactured each
month for the manufacturer to break even if the monthly overhead is P428,000.
A. 952 units
B. 1024 units
C. 1053 units*
D. 874 units

21. What is considered as the principal method for computing depreciation deductions for property in
engineering projects?
A. Modified Comprehensive Recovery System (MCRS)
B. Modified Accelerated Cost Recovery System (MACRS)*
C. General Depreciation System (GDS)
D. Alternative Depreciation System (ADS)

22. What refers to the additional cost that results from increasing the output of a system and is often associated
with a "go-no-go" decisions?
A. fixed cost
B. incremental cost*
C. opportunity cost
D. variable cost

23. For an alternative to be viable, the minimum attractive rate of return (MARR) must be:
A. greater than the rate of return
B. equal the rate of return
C. less than the rate of return*
D. equal the rate of investment

24. The value [(1+i)n - 1]/[(1+i)ni] is called:

A. uniform series sinking fund factor
B. uniform series present worth factor*
C. uniform series compound amount factor
D. uniform gradient present worth factor

25. The value [(1+i)n - 1]/i is called:

A. uniform series sinking fund factor
B. uniform series present worth factor
C. uniform series compound amount factor*
D. uniform gradient present worth factor