College of Engineering Education

2nd Floor, BE Building

Matina Campus, Davao City
Telefax: (082)296-1084
Phone No.: (082)300-5456/300-0647 Local 131

CEE 109 – Engineering Economy

Second Examination
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GENERAL INSTRUCTIONS

• Write your answers on a clean white blank paper. Have your final answers boxed
at all times. No box, no consideration.
• Using the “ClearScanner” Mobile Application, scan (take a picture) of your answers
and compile it as a ONE PDF FILE only for 1 Activity. Multiple Files are not
accepted.
• Upload your PDF File as an “Assignment Type Submission” on BB.
• NOT FOLLOWING INSTRUCTIONS WILL RENDER 20% DEDUCTION FOR THIS EXAM.

• Look for your Set using your ID number and answer only the problems included in your set:

Set A Set B Set C Set D

476887 510980 477622 511511
511545 486770 514401 511621
511130 512341 510858 511626
511945 512294 478605 477936
511694 512598 502158 477142
514158 479095 511431 510867
480466 486462 511312 502326
480439 477237 510967 511401
511847 510882 510599 501759
511465 510887 485447 477774

• You will be graded with the following score rubrics: (Each question is worth 10 points)

Rubrics
No solution or solution not related
0
to what is asked
Wrong solution and wrong answer 3 pt.
Correct solution but wrong answer 5 pt.
Correct answer but wrong units 8 pt.
Correct answer with correct
10 pt.
answer

DON’T FORGET TO WRITE YOUR SET ON YOUR

PAPER!
(deduction of 2 points if no set indicated)

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 College of Engineering Education
2nd Floor, BE Building
Matina Campus, Davao City
Telefax: (082)296-1084
Phone No.: (082)300-5456/300-0647 Local 131

QUESTIONS
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SET A

Problem 1

A fully secured loan of Php 30,000 was to be amortized by 10 equal semi-annual payments, the first payment
to be made 6 months after the loan finalization. After the 6th payment is made, the debtor was in the position
to settle the entire debt balance by a single payment on that date. The interest on the loan is 12% compounded
semi-annually.

a. Draw the cash flow diagram.

b. Determine the amount of installment.
c. Determine the amount of single payment that would settle the debt after the 6 th payment that would
cancel all liabilities in the debt.

Problem 2

A parent on the day the child is born wishes to determine what lump sum would have to be paid into an account
at 5% per annum, in order to withdraw Php 20,000 each of the child’s 18th,19th, 20th and 21st birthdays.

a. Draw the cash flow diagram.

b. What lump sum the parents should pay?

Problem 3

From the following data:

Initial Cost = Php 500,000

Salvage Value = Php 50,000
Useful life = 20 years
Rate of interest = 15%
Annual operating cost = Php 20,000

a. Draw the cash flow diagram.

b. What was the annual installment for the initial cost only?
c. What was Equivalent Uniform Annual Cost of the machine?

Problem 4

A certain property is being sold and the owner received two bids. The first bidder offered to pay P300,000 each
year for 5 years, each payment is to be made at the beginning of each year. The second bidder offered to pay
P240,000 first year, P260,000 the second year and P340,000 each year for the next 3 years, all payments will
be made at the beginning of each year. Money is worth 20% compounded annually for both bids.

a. How much is the equivalent sum of the second bid?

b. Which bid should the owner of the property accept?

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 College of Engineering Education
2nd Floor, BE Building
Matina Campus, Davao City
Telefax: (082)296-1084
Phone No.: (082)300-5456/300-0647 Local 131

SET B

Problem 1

A man purchased a house with a cash price of php 350,000. He was able to negotiate with the seller to allow
him to only pay for a downpayment of 20% and the balance payable in equal 48 end of the month installment
at 1.5% interest per month. On the day he paid the 20th installment, he decided to pay the remaining balance.

a. Draw the cash flow diagram.

b. How much is the monthly payment?
c. What was the remaining balance that he paid?

Problem 2

In five years, Php 18,000 will be needed to pay for a building renovation. For tax purposes, no further
payments are made at the end of first two years beginning now. Money is worth 15% per annum.

a. Draw the cash flow diagram.

b. What payment is necessary to generate this sum?

Problem 3

From the following data:

Initial Cost = Php 300,000

Salvage Value = Php 30,000
Useful life = 20 years
Rate of interest = 10%
Annual operating cost = Php 20,000

a. Draw the cash flow diagram.

b. What was the annual installment for the initial cost only?
c. What was Equivalent Uniform Annual Cost of the machine?

Problem 4

A certain property is being sold and the owner received two bids. The first bidder offered to pay P400,000 each
year for 5 years, each payment is to be made at the beginning of each year. The second bidder offered to pay
P240,000 first year, P360,000 the second year and P440,000 each year for the next 3 years, all payments will
be made at the beginning of each year. Money is worth 20% compounded annually.

a. How much is the equivalent sum of the second bid?

b. Which bid should the owner of the property accept?

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 College of Engineering Education
2nd Floor, BE Building
Matina Campus, Davao City
Telefax: (082)296-1084
Phone No.: (082)300-5456/300-0647 Local 131

SET C
Problem 1

A man purchase a computer system worth Php 15,000 with interest of 5% payable semi-annually. He signed a
contract to pay Php 5,000 cash and to discharge the balance, principal and interest included by equal payments
at the end of each 6 months for 10 years. At the end of four years, the man decided to just settle the remaining
balance, but this time, he was charged of 7% interest semi-annually.

a. Draw the cash flow diagram.

b. Determine the monthly payment.
c. Determine the lump sum he paid at the end of 4 years to discharge all the debt.

Problem 2

The cash price of an apartment condominium is Php 85,908 and can be acquired with a downpayment of Php
50,000 and a yearly payment of Php 10,000 at the end of each year for 10 years starting at the end of 5 years
from the date of purchase. If money is worth “x” percent compounded annually,

a. Draw the cash flow diagram of the payment scheme.

b. Determine the “x” percent.

Problem 3

From the following data:

Initial Cost = Php 200,000

Salvage Value = Php 30,000
Useful life = 20 years
Rate of interest = 10%
Annual operating cost = Php 20,000

a. Draw the cash flow diagram.

b. What was the annual installment for the initial cost only?
c. What was Equivalent Uniform Annual Cost of the machine?

Problem 4

A certain property is being sold and the owner received two bids. The first bidder offered to pay P500,000 each
year for 5 years, each payment is to be made at the beginning of each year. The second bidder offered to pay
P340,000 first year, P460,000 the second year and P540,000 each year for the next 3 years, all payments will
be made at the beginning of each year. Money is worth 20% compounded annually.

a. How much is the equivalent sum of the second bid?

b. Which bid should the owner of the property accept?

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4
 College of Engineering Education
2nd Floor, BE Building
Matina Campus, Davao City
Telefax: (082)296-1084
Phone No.: (082)300-5456/300-0647 Local 131

SET D
Problem 1

The purchaser of a machine paid Php 10,000 cash and agreed to pay Php 3,000 at the end of 6 months for 10
years. He failed to make the first 5 payments of Php 3,000 each. At the end of 3 years, he desires to pay the
tractor by a single payment that would cancel all his accumulated liabilities and future liabilities. The money is
worth 6% per annum compounded semi-annually.

a. Draw the cash flow diagram.

b. What was the amount of installment?
c. What must he pay at the end of 3 years to cancel all his accumulated liabilities and future liabilities?

Problem 2

A new generator has just been installed. It is expected that there will be no maintenance charges until the end
of the 6th year, when Php 300 will be spent at the end of each successive year until the generator is scrapped at
the end of its 14th year in service. The money is worth 6%.

a. Draw the cash flow diagram.

b. What would be the sum of money that should be set aside at the time of installation of the generator to take
care of all maintenance expenses of the generator?

Problem 3

From the following data:

Initial Cost = Php 100,000

Salvage Value = Php 20,000
Useful life = 20 years
Rate of interest = 12%
Annual operating cost = Php 15,000

a. Draw the cash flow diagram.

b. What was the annual installment for the initial cost only?
c. What was Equivalent Uniform Annual Cost of the machine?

Problem 4

A certain property is being sold and the owner received two bids. The first bidder offered to pay P400,000 each
year for 5 years, each payment is to be made at the beginning of each year. The second bidder offered to pay
P240,000 first year, P360,000 the second year and P540,000 each year for the next 3 years, all payments will
be made at the beginning of each year. Money is worth 20% compounded annually for both bids.

a. How much is the equivalent sum of the first bid?

b. Which bid should the owner of the property accept?

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