Engineering Economy

--------------------------------------------------------------------------------------------------------
Sheet 1
1- Define the following: Investment, Inflation, Deflation, Interest, Interest rate, rate of return.
2- Why engineering economy is important to engineers?
3- What is engineering economy?
4- You borrow $100 today at 4% interest. How much do you owe after 5 years?
5- You win $ 1000 payable one year from now. How much would you take today, instead, if
interest is 6%?
6- If you wish to accumulate $ 100,000 at the end of five years in an account that pays 12%
annually, how much would you need to deposit now?
7- A father invests $ 10,000 now in a fund paying 12% annually. He intends to leave the
money in the fund, both interest as it accumulates and principle. In 10 years he will
withdraw the money to finance his daughters education at a university. How much will
be in the account at the end of the tenth year?
8- $ 8000 is invested at 7% for 6 years. Find the simple interest and the interest
compounded annually?
9- Given a principal of $12,000 with a compound amount of $17,631.94 and interest rate of
8% compounded annually, what is the time period in years?
10- Given an amount needed (future value) of $33000 in 5 years at an interest rate of 12%
compounded annually, find the present value and the amount of interest earned?
11- $100,000 lent for 4 years at i = 12% per year compounded. What is repayment after 4
years?
12- $500,000 to be received ten years from today if the discount rate is 6% annually, Find P?
13- What is the present vale of $100,000 to be received at the end of 25 years given a 5%
discount rate?
14- How many years will it take for 10,000$ to grow to 200,000$ given a 15% compound
growth rate?
15- A person deposits 5,000$ into a money market account which pays interest at a rate of
8% per year. What is the amount that would be in the account at the end of ten years?
16- A small company wants to deposit a single amount of money now so that it will have
enough to purchase a new truck costing 50,000$ five years from now. If the money can
be deposited into an account which earns interest at 10% per year, what is the amount
that must be deposited?