Engineering Economics

1. You currently owe $1000 today and $1500 in 95 days at a rate of interest of 7%. What is the single equivalent
payment 50 days from today?
A. $2522.53 B. $2482.75 C. $2505.83 D. $2495.34 E. $2496.75
2. You owe $3521.75 in 47 days and have decided to pay off your loan early. Your interest rate is 6%. What is the
size of the check that you write today to pay off all of your debt?
A. $3494.75 B. $3548.96 C. $3226.82 D. $3521.75 E. $3269.17
3. You have $4,321 invested in a 180-day savings certificate at an interest rate of 3.5%. How much money will you
have when the certificate matures?
A. $4203.32 B. $31543.30 C. $5066.82 D. $4328.46 E. $4395.58
4. The exact number of days between January 29 and March 21 during the next leap year is?
A. 53 B. 52 C. 51 D. 54 E. 50
5. What rate of interest did you receive over a period of 62 days if your principal was $7544 and it has a maturity
value of $7588?
A. 5.92% B. 34.33% C. 0.58% D. 5.83% E. 3.43%
6. What rate of interest did you earn for a period of 235 days if you invested $175 and you earned $192 in
interest?
A. 13.75% B. 325.73% C. 15.09% D. 150.88% E. 123.22%
7. How many days did it take for your investment of $2600 to accrue $147 in interest at a rate of 4.2%?
A. 1 B. 317 C. 251 D. 2 E. 491
8. How much interest will you pay on a loan of $11,500 if you are paying the loan off in 7 months? Your loan rate is
7.25%.
A. $465.21 B. $479.69 C. $469.58 D. $5836.25 E. $486.35
9. How much money do you have to invest in order to accumulate a total of $4695 in 320 days if you are able to
earn 6.52% on your money?
A. $4509.72 B. $214.74 C. $4696.54 D. $2987.37 E. $4441.14
10. You owed $500 30 days ago, and you missed the payment. You also owe an additional $400 in 3 months. What
single equivalent value is due if your focal date is today and you are paying at an interest rate of 8.26% on your
debt?
A. $904.89 B. $993.28 C. $895.30 D. $911.65 E. $888.54
11. Find the maturity value of a deposit of $2500 invested at 3.12% from September 18, 2006 to July 13, 2007.
A. $2563.68 B. $2563.47 C. $2563.89 D. $2578.00 E. $2565.00
12. Compute the amount of money that, deposited in an account on January 14, 2005, will grow to $1982.61 by
June 29, 2005, at 4.32% pa.
A. $2068.26 B. $1896.96 C. $1944.41 D. $2021.56 E. $2060.52
13. Two debts, one of $5000 due in four months with interest at 6% and the other of $4000 due in 15 months with
interest at 7%, are to be discharged by making a single payment one year from today. What is the size of the
payment if money is worth 5%?
A. $9620.00 B. $5270.00 C. $9450.00 D. $4350.00 E. $9566.30
14. Jack borrowed $8000. The loan is to be repaid in three equal payments due in 8 months, 10 months, and 12
months from now, respectively. What is the size of each of the equal payments if the interest rate on the loan is
6.95%?
A. $3130.00 B. $2820.89 C. $4208.37 D. $2930.91 E. $2666.67
15. Two debt payments, of $400 due 2 months ago and $700 due in 6 months, are to be settled by two equal
payments due in four and ten months from now, respectively. Determine the amount of the equal payments if
money is worth 5.6%.
A. $552.37 B. $1104.73 C. $602.03 D. $2179.37 E. $559.99
16. You invest $7500 in a savings account that pays interest of 3.6% compounded monthly. What is the value of
your account after 17 months?
 A. $7825.21 B. $7541.45 C. $13682.87 D. $7365.70 E. $7891.82
17. You have an investment that will mature in 15 months and have a value of $3100. You need some quick cash
and decide to sell today at a discount rate of 4.2% compounded quarterly. What is the cash value?
A. $2942.25 B. $2941.72 C. $2734.80 D. $2650.43 E. $2906.13
18. You have a loan for $5100 and you want to make three equal payments every 6 months. The interest rate on the
loan is 6.6% compounded semi-annually. What is the size of the payments?
A. $492.46 B. $1813.41 C. $1777.86 D. $1929.18 E. $380.28
19. You lend a friend $1200 and they agree to make quarterly payments for 1 year. You charge your friend 8.4%
compounded quarterly. What is the size of the payments?
A. $422.61 B. $315.91 C. $1300.80 D. $263.26 E. $321.29
20. You invest $10000 of your money in a locked-in savings account that earns 4.8% compounded monthly for 9
months. You have a family emergency and need to withdraw your funds 3 months early. You sell the savings
account at a 5.4% compounded quarterly interest rate. How much did you sell the account for?
A. $9955.67 B. $10227.74 C. $10182.53 D. $9957.08 E. $9825.62
21. You borrow $4250 at a rate of 6.6% compounded monthly. You make a partial payment of $1100 in 2 months.
You also agree to make two equal payments 3 and 5 months after the partial payment. What is the size of the
partial payments?
A. $1642.88 B. $1633.87 C. $1628.45 D. $1651.89 E. $1627.67
22. You invest $6300 in a floating rate guaranteed investment certificate. For the first 18 months you earn 1.9%
compounded semi-annually. For the next 13 months you earn 2.2% compounded monthly. What is the maturity
value of the certificate?
A. $6668.07 B. $7471.79 C. $7262.82 D. $6637.44 E. $6616.68
23. You have an investment that will mature for $9800 in 48 months. You sell the investment 21 months before
maturity. The discount rates used are 5.4% compounded quarterly for the first nine months of the discount
period (from the date of maturity) and then 4.8% compounded monthly for the remaining discount period. How
much did you sell the investment for?
A. $8973.26 B. $7978.10 C. $8279.57 D. $5363.14 E. $8158.09
24. You want to retire with $250000 in the bank and you are able to earn 4.4% compounded quarterly for the next
25 years. You currently have $75,000 saved up. How much more do you have to invest in 10 years in order to
achieve your goal?
A. $78538.12 B. $73582.00 C. $13040.74 D. $13505.69 E. $1965.88
25. You will need three amounts of $11,200 in each of three years in order to go to school. You are planning on
going to school starting in 3 years and ending in 5 years. You are able to earn 9.6% compounded quarterly. How
much money do you have to have today in order to be able to go to school?
A. $17879.93 B. $20972.10 C. $17979.46 D. $18361.26 E. $23059.07
26. You invested $3000 into a five-year term deposit at 4% compounded monthly. By maturity, how much interest
had the investment made?
A. $662.99 B. $649.96 C. $660.57 D. $50.33 E. $667.54
27. A demand loan for $4000 with interest at 6.3% compounded quarterly is repaid after 3 years, 2 months. How
much money is repaid?
A. $4830.18 B. $4880.62 C. $4978.24 D. $4901.05 E. $4875.58
28. Find the principal that will amount to $7300 in four years at 5.8% compounded annually.
A. $5791.74 B. $5798.16 C. $5826.13 D. $7160.56 E. $9146.72
29. A debt of $8000 is due on January 1, 2008. What is the value of the obligation on August 1, 2005, if money is
worth 7.5% compounded monthly?
A. $9584.31 B. $6677.58 C. $6636.10 D. $6719.31 E. $9524.78
30. Find the proceeds of a $4500, three-year note bearing interest at 6% compounded semi-annually, discounted 16
months after the date of issue at 6.5% compounded monthly.
A. $4928.32 B. $4822.97 C. $4906.25 D. $5373.24 E. $2834.22
31. Calculate the future value of $2200 if it is invested at an interest rate of 3.6% compounded quarterly for 3 years
and 5 months.
A. $2723.81 B. $2494.01 C. $2486.58 D. $2487.49 E. $2260.52
32. Calculate the cash value of a bond that will mature with a value of $6500 in 7 years and 3 months. The bond is
discounted at 5.8% compounded semi-annually.
A. $2869.93 B. $4294.28 C. $3963.95 D. $5283.26 E. $4319.09
33. How long, in compounding periods, will it take for $4327 to increase by $4799 if you are able to earn 6.6%
compounded semi-annually?
A. 3.189 B. 1.620 C. 22.985 D. 11.676 E. 23.653
34. How long did it take for $1735 to increase to $2310 if the investment earned interest at a rate of 8.88%
compounded quarterly (give your final answer in years and months e.g. 3 years and 7.23 months)?
A. 3 years 4.14 months B. 3 years .04 months C. 13 years .04 months

D. 3 years .14 months E. 52 years .14 months

35. You owe $3510 due in 7 months. In addition you owe $2780 due in 13 months and $4125 due in 19 months. You
are paying 8.52% compounded monthly on you loan. What single amount three months from now will pay off
the entire loan of the three future payments?
A. $9608.33 B. $9614.29 C. $9685.69 D. $9482.28 E. $9631.29
36. What nominal rate of interest compounded quarterly will have to be earned on a savings account for it to grow
from $1125 to $1455 over a period of 15 months?
A. 1.73% B. 18.06% C. 7.10% D. 5.28% E. 21.12%
37. You have an interest rate of 10.44% compounded quarterly. What is the equivalent effective annual interest
rate?
A. 10.81% B. 10.86% C. 48.77% D. 2.51% E. 110.86%
38. How much will $1520 grow to be after 4 years if it is compounded annually at a rate of 7%?
A. $5148.56 B. $6748.71 C. $6080.00 D. $1159.60 E. $1992.41
39. What is the cash value of $2135 if it is discounted for 3.5 years at 7.21% compounded semi-annually?
A. $1666.22 B. $2735.66 C. $350.54 D. $2734.74 E. $1666.79
40. A 6-month non-interest bearing promissory note is sold 2 months after it was issued. The face value of the note
is $5500 and it is discounted at a rate of 5.2% compounded annually. What are the proceeds?
A. $6086.87 B. $6403.39 C. $5500.00 D. $4969.71 E. $4724.06
41. A loan is to be repaid by 3 equal payments of $2800 each due in 3 months, 9 months, and 21 months from now.
In how many months can the obligation be paid off by a single payment of $9050 if interest is 6.4% compounded
quarterly?
A. 24.86 months B. 14.01 months C. 15.26 months D. 8.31 months E. 33.24 months
42. A loan of $3000 borrowed today is to be repaid by a payment of $1600 in 12 months and a final payment of
$1700. If interest is 5.8% compounded semi-annually, when should the final payment be made? (Give your final
answer in years and months e.g. 3 years and 7.23 months).
A. 4 years 0.27 months B. 1 year 11.66 months C. 4 years 2 months
D. 1 year 11.53 months E. 2 years 0.14 months
43. What is the quarterly compounded rate that results in $800 accumulating to $965.21 in 42 months?
A. 1.79% B. 5.4% C. 5.38% D. 5.51% E. 5.9%
44. What is the effective rate of interest equivalent to 6.1% compounded monthly?
A. 6.0755% B. 6.0% C. 5.78% D. 6.1678% E. 6.0301%
45. You have money to invest in interest-earning deposits. You have determined that suitable deposits are available
at Bank A paying 3.55% compounded semi-annually, at Bank B paying 3.58% compounded annually, at Bank C
 paying 3.54% compounded quarterly, and at Bank D paying 3.52% compounded monthly. Rank the institution(s),
showing the highest rate of interest first?
A. B, A, C, D B. C, A, B, D C. D, C, A, B D. A, B, C, D E. C, A, D, B
46. What is the future value of an annuity with monthly deposits of $175 for a period on 11 years at an interest rate
of 7.32% compounded monthly? The deposits are made at the end of the month.
A. $1984.80 B. $2809.42 C. $35335.04 D. $26812412.59 E. $31700.58
47. You are offered payments of $325 at the end of each semi-annual period for 6 years. You feel that the cost of
money is 5.4% compounded semi-annually. What is the cash value?
A. $2816.66 B. $3382.69 C. $1778.23 D. $2968.76 E. $3293.76
48. You want to save $400 per quarter for 17 years towards the purchase of a recreational vehicle (RV). You feel that
you can earn 6.44% compounded quarterly for this period of time. If you start immediately, what is the most
expensive RV that you can purchase?
A. $48761.21 B. $426606.51 C. $49546.27 D. $7875.27 E. $454079.97
49. What is the interest rate compounded quarterly that you will need to earn in order for an investment of $1255
to grow to be $1690 after 2.75 years?
A. 11.429% B. 8.063% C. 10.969% D. 2.742% E. 4.136%
50. What nominal annual rate of interest was charged on a loan of $3500.00 repaid in monthly installments of $107.19
in three years and 3 months?
A. 3.68% B. 0.92% C. 2.15% D. 6.45% E. 11.03%
51. How long will it take for quarterly deposits of $225 to accumulate to be $50000 at an interest rate of 8.44%
compounded quarterly? (Final answer in years and months e.g. 7 years and 4.24 months)
A. 83.26 years B. 20.815 years C. 20 yrs 9.78 months D. 36.82 years E. 9 yrs 9 months
52. How many monthly compounding periods does it take for a loan with a maturity value of $210000 to be reduced to
$125889 at a discount rate of 7.44% compounded monthly?
A. 7.131 years B. 993.468 months C. 82.789 months D. 83.235 months E. 74.895 months
53. You currently have $2376 saved towards the purchase of a home theatre system. You want to be able to buy a
system for $5600 plus GST in 2 years. Your money is earning 3.84% compounded monthly. What is the size of your
monthly deposit?
A. $137.59 B. $1682.70 C. $3.20 D. $137.15 E. $1797.51
54. A contract valued at $15000.00 requires payment of $1684.65 at the end of every six months. If interest is 7.4%
compounded semi-annually, what is the term of the contract? (Final answer in years and months e.g. 7 years and 4.24
months)
A. 9 years 0.19 months B. 5 years 0.68 months C. 5 years
D. 5 years 6 months E. 7 years 6.40 months
55. How much interest is included in the accumulated value of $95.00 paid at the end of each month for three years if
interest is 5.9% compounded monthly?
A. $5128.89 B. $3420.00 C. $1708.89 D. $311.35 E. $3911.35
56. A subscription can be purchased for $40.00 per month over 24 months, or $800 if the entire amount is paid now.
What effective annual rate of interest is charged?
A. 20.0% B. 1.51% C. 19.75% D. 21.64% E. 18.16%
57. How long will it take to build up a fund of $6000.00 by saving $250 every month at 4.1% compounded monthly?
(Final answer in years and months e.g. 7 years and 4.24 months)
A. 1 year 0 months B. 1 year 9.61 months C. 1 year 11.13 months
D. 17 years 1 month E. 1 year 11.11 months
58. Joanne made semi-annual deposits of $820 into a savings account. For the first four years interest was 5%
compounded semi-annually. Since then the rate of interest has been 3.9% compounded semi-annually. How much is the
account balance after eleven years? (Final answer in years and months e.g. 7 years and 4.24 months)
A. $23667.54 B. $22261.65 C. $15278.87 D. $22442.49 E. $22951.48
59. A contract is signed requiring payments of $1100.00 at the end of every three months for six years. How much is the
cash value of the contract if money is worth 8.5% compounded quarterly?
A. $33979.23 B. $20035.78 C. $61872.89 D. $20513.69 E. $15468.22
60. The amount of $18000.00 is put into a seven-year deposit paying 6.2% compounded semi-annually. After seven years
the deposit is converted into an ordinary annuity of equal monthly payments of $1700.00 each. If interest on the annuity
is 5.7% compounded monthly, what is the term of the annuity? (Final answer in years and months e.g. 7 years and 4.24
months)
A. 1 year 4.93 months B. 6 years 1.08 months C. 1 year 1.03 months
D. 1 year 5.62 months E. 1 year 0.71 months
61. What is the future value of an annuity with monthly deposits of $175 for a period on 11 years at an interest rate of
7.32% compounded monthly? The deposits are made at the end of the month.
A. $35335.04 B. $26812412.59 C. $1984.80 D. $2809.42 E. $31700.58
62. You are offered payments of $325 at the end of each semi-annual period for 6 years. You feel that the cost of money
is 5.4% compounded semi-annually. What is the cash value?
A. $1778.23 B. $3293.76 C. $2968.76 D. $2816.66 E. $3382.69
63. You want to save $400 per quarter for 17 years towards the purchase of a recreational vehicle (RV). You feel that you
can earn 6.44% compounded quarterly for this period of time. If you start immediately, what is the most expensive RV
that you can purchase?
A. $7875.27 B. $426606.51 C. $454079.97 D. $48761.21 E. $49546.27
64. What is the interest rate compounded quarterly that you will need to earn in order for an investment of $1255 to
grow to be $1690 after 2.75 years?
A. 10.969% B. 2.742% C. 8.063% D. 11.429% E. 4.136%
65. What nominal annual rate of interest was charged on a loan of $3500.00 repaid in monthly installments of $107.19
in three years and 3 months?
A. 0.92% B. 6.45% C. 11.03% D. 2.15% E. 3.68%
66. How long will it take for quarterly deposits of $225 to accumulate to be $50000 at an interest rate of 8.44%
compounded quarterly? (Final answer in years and months e.g. 7 years and 4.24 months)
A. 9 yrs 9 months B. 20 yrs 9.78 months C. 36.82 years
D. 20.815 years E. 83.26 years
67. How many monthly compounding periods does it take for a loan with a maturity value of $210000 to be reduced to
$125889 at a discount rate of 7.44% compounded monthly?
A. 82.789 months B. 993.468 months C. 7.131 years D. 83.235 months E. 74.895 months
68. You currently have $2376 saved towards the purchase of a home theatre system. You want to be able to buy a
system for $5600 plus GST in 2 years. Your money is earning 3.84% compounded monthly. What is the size of your
monthly deposit?
A. $1682.70 B. $3.20 C. $1797.51 D. $137.15 E. $137.59
69. A contract valued at $15000.00 requires payment of $1684.65 at the end of every six months. If interest is 7.4%
compounded semi-annually, what is the term of the contract? (Final answer in years and months e.g. 7 years and 4.24
months)
A. 9 years 0.19 months B. 5 years 6 months C. 5 years 0.68 months
D. 5 years E. 7 years 6.40 months
70. How much interest is included in the accumulated value of $95.00 paid at the end of each month for three years if
interest is 5.9% compounded monthly?
A. $3420.00 B. $3911.35 C. $311.35 D. $5128.89 E. $1708.89
71. A subscription can be purchased for $40.00 per month over 24 months, or $800 if the entire amount is paid now.
What effective annual rate of interest is charged?
A. 1.51% B. 21.64% C. 20.0% D. 19.75% E. 18.16%
72. How long will it take to build up a fund of $6000.00 by saving $250 every month at 4.1% compounded monthly?
(Final answer in years and months e.g. 7 years and 4.24 months)
 A. 1 year 9.61 months B. 1 year 0 months C. 1 year 11.13 months
D. 17 years 1 month E. 1 year 11.11 months
73. Joanne made semi-annual deposits of $820 into a savings account. For the first four years interest was 5%
compounded semi-annually. Since then the rate of interest has been 3.9% compounded semi-annually. How much is the
account balance after eleven years? (Final answer in years and months e.g. 7 years and 4.24 months)
A. $22951.48 B. $15278.87 C. $22442.49 D. $23667.54 E. $22261.65
74. A contract is signed requiring payments of $1100.00 at the end of every three months for six years. How much is the
cash value of the contract if money is worth 8.5% compounded quarterly?
A. $20035.78 B. $61872.89 C. $33979.23 D. $15468.22 E. $20513.69
75. The amount of $18000.00 is put into a seven-year deposit paying 6.2% compounded semi-annually. After seven years
the deposit is converted into an ordinary annuity of equal monthly payments of $1700.00 each. If interest on the annuity
is 5.7% compounded monthly, what is the term of the annuity? (Final answer in years and months e.g. 7 years and 4.24
months)
A. 1 year 1.03 months B. 6 years 1.08 months C. 1 year 0.71 months
D. 1 year 4.93 months E. 1 year 5.62 months
76. You start to save for a major purchase. You can invest $320 every three months for 3 years and 9 months. You are
able to earn 5.34% compounded semi-annually. What is the amount of interest that you earn during the entire term?
A. $468.54 B. $472.26 C. $5272.26 D. $1017.30 E. $2506.00
77. You want to be able to set up a fund that will last for 20 years and you feel that you can earn 4.3% compounded
semi-annually. How much money do you have to deposit today in order to be able to provide annual payments of $3000
each?
A. $80262.73 B. $39708.99 C. $39549.03 D. $92612.74 E. $48456.65
78. You make seven quarterly deposits starting at $1125. The interest rate is 4.55% compounded monthly. If you wish to
have $10000 in your savings, how much more do you need to deposit at the end?
A. $1850.05 B. $8149.95 C. $1480.42 D. $7875.00 E. $2125.00
79. You make eleven semi-annual deposits of $300. The interest rate is 5.12% compounded annually. How much has
been deposited in total?
A. $3750.42 B. $3703.53 C. $3728.53 D. $3716.03 D. $3741.04
80. You make six monthly deposits of $1020. The interest rate is 4.36% compounded quarterly. How much interest has
been earned in total?
A. $77.92 B. $55.66 C. $6120.00 D. $6175.66 D. $80.82
81. Deposits of $180 made at the end of each quarter accumulate interest at 3.9% compounded month. How much will
have accumulated after five years?
A. $12039.04 B. $12035.20 C. $3955.01 D. $3600.00 E. $3953.79
82. Luc receives annuity payments at the end of every six months. If he deposits these payments in an account earning
interest at 4.5% compounded monthly, what is the effective semi-annual rate of interest?
A. 4.41% B. 4.594% C. 4.585% D. 4.500% E. 4.692%
83. A loan is repaid by making payments of $783.00 at the end of every month for seven years. If interest on the loan is
6.88% compounded quarterly, what was the principal of the loan?
A. $5481.00 B. $17261.39 C. $52147.72 D. $21924.00 E. $65772.00
84. Making payments of $1500.00 at the end of every year for nine years fulfills a contract. Interest is 6% compounded
quarterly, what is the cash price of the contract?
A. $8333.14 B. $10142.27 D. $13500.00 D. $21579.83 E. $10205.54
85. What is the principal from which $289 can be withdrawn at the end of each month for fifteen years if interest is 4%
compounded quarterly?
A. $39105.65 B. $25574.28 C. $48290.78 D. $32821.61 E. $46786.95
86. What sum of money must be deposited at the end of every three months into an account paying 3.7% compounded
monthly to accumulate to $18000.00 in twelve years?
A. $299.38 B. $293.76 C. $252.74 D. $600.06 E. $29.94
87. Katie is saving $5000 at the end each year. How soon can she retire if she wants to have a retirement fund of
$100000.00 and interest is 3.85% compounded monthly?
A. 20.70 years B. 39.84 months C. 180.00 months D. 15.06 years E. 19.43 years
88. Melinda deposited $140.00 in a savings account at the end of each month for 96 months. If the accumulated value of
the deposits was $16500.00 and interest is compounded semi-annually, what was the nominal rate of interest?
A. 4.22% B. 3.47% C. 3.73% D. 3.98% E. 3.44%
89. A car valued at $22000.00 can be purchased with 10% down and monthly payments of $456.65 for four years and
three months. What is the nominal rate of interest compounded annually?
A. 9.24% B. 8.26% C. 5.19% D. 8.00% E. 7.72%
90. A debt of $8000.00 is repaid by making payments of $700.00. If interest is 7.05% compounded monthly, for how long
will payments have to be made at the end of every six months?
A. 15.03 years B. 15.03 semi-annual periods C. 14.96 semi-annual periods
D. 11.86 semi-annual periods E. 14.96 years