Mane! % NOR 4 Spring 2015 ae ans ee (a) Marginal *b. Deprecated © Paral Segmented 2. The allocation of resources to specific projects based on economic analysis is known as: ‘Capital eonservation i. Capital analysis Capital assessment © Capita desing 3. Ina replacement analysis, ‘defender’ and ‘challenger refer to (a Existing equipment and replacement candidate, respectively “6. Replacement candidate and existing equipment, respectively ‘e. Highest first cost and second-highest first cost replacement candidate, respectively 4d, Second-highest fist cost and highest frst cost replacement candidate, respectively w 4. Themnmber of years at which the FLIAC of exunership fs minimized is known asthe: ‘a. Recovery period bb, Payback lite > Minimum cos ite ‘@. Cost minimized lite 5. ‘The value of actual dollars is adjusted for inflation, a. True 2 Fabe 6 Which ofthe following should not be considered when etng a MARR for a projet? Coa of booed money & Infaion Z —& Sunkeoss @ Cos afeapa 2. According othe text, allan sk equi that probabil ofits outcomes re town tne Palewv 8. Alan schedule shows loan payments, interest paid, prineipal paid and remaining balance. (3) Amortization ‘6. Payback . Economic a Capital 9 Payback period may bean appropriate economic erterion when quits mor important than profi. , @ Te 2. False 10. The cost esis mins any deprecation is ul the: Capital ein Book value 2 '& Recovered depres Aten vale 11. (Ai) eae known asthe Uniform srs compound amount Gcor ®. Union unre worth fir Uniform anal ponent factor 1 Unitorm series ning fund ator 12. Neglecting to consider non-monetary consequences of a decision is an example of an ethical lapse at what stage ofthe decision-making process? ' Construct a model 4 b. Augit the result Select the criterion to determine the best alternative <4. Define the goal or objective 13. Which of the following is not one of the fundamental canons of ethical behavior for ‘engineers? Engineers shal ‘Hold paramount the safety, health and welfare of the public. '. Perform services only in areas oftheir competence. Ze. Avoid deceptive ats © Maximize shareholder run, 14, At maturity, bond holders receive the _ value. (® Par Capit © Coupon @. Yield 2 15. The economic life ofa depreciable asst is always equivalent to its useful service life. Trueo For any ofthe calculation problems, ifyou are unsure how to proceed, start with a cash flow diagram. 16. A hospital in The Upper Cumberland area bought a diagnostic machine at a cost of $40,000, Maintenance cost i expected to remain constant throughout the life ofthis ‘machine at $2,000 per yea. The salvage value i estimated to be “0” a the end ofthe useful life of [0 years. Determine the economic life ofthis machine. MARR = 10% a. Lyear b. S years e. Tyears @ Wyeors EURC = 46,000 (Mp tay, x) +2000 Sronfl mv ibe Qe EUR continues do deren e/ vtens o& see. Eeonerse (Kt UAL LUG FLO 086, 17. The cost data for equipment being considered ata local company are given inthe ‘lows. What isthe economic life? a. 2years 3 years @ tren 5 years Year| EUAC of First Cost EUAC of TEUAC of Operating Salvage Value) Maintenance Cost T $9,000 $400) S800 2 6.000 800 1,600 3 4,000) 7,200 2,400 4 2.500) 1,600. 2,600 S 1,500 2,000) 3.500 Bune \ 21000 + 460+ Bod = 19,200 2 Goce + TOS* uso * HE AO = ose + I2es + 2400 = 47,608 4 geet Meo + T6OG =MeTSD => Loweck 5s \e004 2000+ 3550 = 187,000wn 18. Ifthe real interest rate is 7% and the inflation rat is 5%, what i the matket interest rate? @& 12.38% b. 11.65%. ©. 16.63% 4. 13.84% 207 O65 TO oXoo8 = OSs ISG 19. Liz Taylor bought some farming lands fr $100,000 five years ago. She sold the property year for $500,000, If the annual inflation rate for the past 5 years has been at 6%, ‘compute the after-tax real interest rate fortis investment, Assume no deprecation anda 15% copital gains tax rate a, 19.84% b. 24.70% & 26.88% a. 28.13% ceed spin = $00,008 - 00,000 400 600 cot ayn tors ©.1SG60,c80) = Hoo, 060 10 RGle doe cot Ges Ser yer S! 500, c06 - Go,008= HAO, 008 Ho. se92 100,808 (F/0, U.S) BE OHNT= BAG Le Hehe EE OME {FOC TO.OOI = O.26BB = UE.W 20. n the cash flow diagram below, determine the value of x ifthe interest rte is 8%. @ 3687 BD $2687 or meng. of He above ©. $329.16 4 $480.70 5 7 2000 oe (", 0%, 2-H (Me 8,1) mee as cowl PF] Vise ge ‘rconn, rather than * 860 2PO= ANTY~ Logon sete, Se oer 2e0e = LAs et Sete tis. 15 21, The cashflows for thre different alternatives are given in table below, MARR. ‘Based on an incremental rate of return analysis, the best alterat a AIA bale @ ane &. Doothing AA [ARB [ARC Tn cost [5,003,000 [7.500 Annual beni | $1487 2.518 [2.133 iRR 4% [13% Tae 0 Life mya 5 BK UA ser cat * S00 wusso RenBacbie SOF 1% s Gay § zseoe Grte(tmisd sse0= te5 (Pais Crssy PANiS= B.GIBZ TIRGGS = EG eee See's kekwen Lote ae Be eitve AB chose © ewe C 22. I is estimated thatthe annual maintenance cost of a statue erected in front of a public building in a state capital would be $1,000. Assuming an intrest rate of 4% year ‘compounded quarterly, determine the capitalized cost for maintaining the statue. 5 @ 924631 b. $25,000 © $2867 4. $30, 124 ERelive orth tera rales (1 SUF o.04000 = Hoe % p. AL. Brose fe adits $24,680.5410 23. Philipp Inc, « German company, is considering the following two equipment alternatives or the plat in Tennesse. The cost information for the two machines wr consideration ‘are in table below. Using present worth analysis, whichis the beter option? @® Machine x b. Machine ¥ Machine X Machine V ‘$80,000 $66,000 ‘12,000 forthe first 10 years and $9,000 per year for 20 years {8,000 forthe next 10 years 20) 330000 [s20.p00- 10% J ~ Bes + Goo (Ma, 10K 2) + Veoel P/A,,10% * 0000( He 1%, 20) OR rtey = = Reece | Ree (a.SI4) + 4oee(g. 145) + 5e000(0.4R6) = F160 [bors + Vooa( Hp, I8% 20) + 20000( Fe, lo%, 20) = = Gboo0 + Wwoo(@S1H) + Zocee(0.14G) #3558