URDANETA CITY UNIVERSITY

San Vicente West, Urdaneta City

College of Engineering and Architecture

ACTIVITY NO. 1
ENGINEERING ECONOMY
January 23-24, 2021

Problem 1: A company manufactures 1,000,000 units of a

product yearly. A new design of the product will reduce
materials cost by 12% but will increase processing cost by 2%.
If materials cost is P1.20 per unit and processing will cost Php
0.40 per unit, how much can the company afford to pay for
the preparations of the new design and making changes in
equipment?

Problem 2: Determine the exact and ordinary simple interest

on Php1, 200.00 for the period from January 16 to November
26, 1992, if the rate of interest is 24%.

Problem 3: A man borrows Php6,400 from a loan association.

In repaying this debt he has to pay Php400.00 at the end of
every 3 months on the principal and a simple interest of 16%
on the principal outstanding at that time. Determine the total
amount he has paid after paying all his debt?

Problem 4: A man possesses a promissory note, due to 3 years

hence, whose maturity value is Php 6, 700.48. If the rate of
interest is 10% compounded semi-annually, what is the value
of this note now?

Problem 5: If you are investing your money which is better:

12% compounded monthly or 12.5% compounded annually?

Problem 6: An advertisement of an investment firm states that

if you invest Php500.00 in their firm today you will grt
Php1,000.00 at the end of 4.5 years. What nominal rate is
implied if interest is compounded (a) quarterly? (b) monthly?
Determine also the effective rate of interest in each case.

Problem 7: A one-bagger concrete mixer can be purchased

with a down payment of Php8,000 and equal installments of
Php600 each paid at the end of every month for the next 12
months. If money is worth 12% compounded monthly,
determine the equivalent cash price of the mixer.

Problem 8: How much money would you have to deposit for

five consecutive years starting one year from now if you want
to be able to withdraw Php 50,000 ten years from now?
Assume the interest is 14% compounded annually?

Problem 9: A certain annuity pays Php 80.00 at the end of

every 3 months. If the present value of the annuity is Php
1,200 and the accumulated amount is Php 2,000. Determine
the nominal rate.

Problem 10: If money is worth 8% compounded quarterly,

compare the present values of the following:
(a) An annuity of Php1,000 payable quarterly for 50
years
(b) An annuity of Php1,000 payable quarterly for 100
years
(c) A perpetuity of Php1,000 payable quarterly.