Engineering Economics -Assignment 1

1 group= 8-10 students in alphabetical order

Neat work lead to more mark

1. How long will it take for money to quadruple itself if invested at 20% compounded
quarterly?
2. Five thousand pesos is deposited at the end of each year for 15 years into an account
earning 7.5% compounded continuously. Find the amount after 15 years.
3. A man made a year-end payment of B100,000 to an account earning 8% annually for 10
years. How much is the account for ten years?
4. Find the effective rate on a nominal rate of 8.5% compounded continuously.
5. What is the present worth of a perpetuity of B10,000 annually if money is worth 10%
compounded monthly?
6. A house and lot costing Birr 2 Million was bought at a down payment of Birr 500,000 and
1 Million after one year. The remaining balance will be paid at the end of the third year. If
the interest rate is 24% compounded semi-annually, what is the required payment?
7. To withdraw the following $1,000 payment series, determine the minimum deposit (P)
you should make now if your deposits earn an interest rate of 10%, compounded annually.
Note that you are making another deposit at the end of year 7 in the amount of $500. With
the minimum deposit P, your balance at the end of year 10 should be zero.
8. A couple is planning to finance their 5 year old daughter’s college education. They
established a college fund that earns 10%, compounded annually. What annual deposit
must be made from the daughter’s 5th birthday (now) to her 16th birthday to meet the
future college expenses shown in the following table? Assume that today is her 5th
birthday.

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Engineering Economics -Assignment 1
1 group= 8-10 students in alphabetical order
Neat work lead to more mark

9. What value of F3 would be equivalent to the payments shown in the cash flow diagram
below? Assume that the interest rate is 10%, compounded annually.

10. What value of C makes the two annual cash flows equivalent at an annual rate of 10%?

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