Machine Problem No.

1 ENGINEERING ECONOMY

Objective To perform engineering economic analysis using Microsoft Excel® functions Problem Statements 1. Amy Parker, a 22-year old and newly hired marine biologist, is quick to admit that she does not plan to keep close tabs on how her retirement plan will grow in time. Amy’s contribution, plus that of her employer, amounts to $2200 per year starting at age 23. Amy expects this amount to increase by 3% each year until she retires at the age of 62 (40 end-of-year payments). What is the compounded future value of Amy’s plan if it earns 7% per year? What is the discounted present value of the plan? 2. After years of being debt-encumbered college student, Lara decides that she wants to pay for her dream car in cash. Not having enough money now, she decides to specifically put money away each year in a “dream car” fund. The car she wants to buy will cost $60,000 in eight years. She is going to put aside $6,000 each year to save for this. At what interest rate must she invest her money to achieve her goal of having enough to purchase the car in 8 years? 3. Ned and Larry’s Ice cream Company produces specialty ice cream and frozen yogurt in pint -sized containers. The latest annual performance report praised the firm for its progressive policies but noted that environmental issues like packaging disposal were a concern. In an effort to reduce the effects of consumer disposal of product packaging, the report stated that Ned and Larry’s should consider the fo llowing proposals. Proposal A- package all ice cream and frozen yogurt in quart containers Proposal B- package all ice cream and frozen yogurt in half-gallon containers By packaging the product in containers larger than the current pints, the plastic coated bleached sulphate board containers will hold more ounces of product per square inch of surface area. The net result is less

Malvar, Iannah, B.

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