ENGINEERING ECONOMY

MIDTERM QUIZ

NAME :_________________________________________ DATE : March 24 , 2020

INSTRUCTOR : Engr . Manuntag TIME LIMIT : 1 hr .

PART I .MULTIPLE CHOICE . Write the capital letter of the correct answer on the space provided. Support your
answer with solution . (20 PTS EACH)

___________ 1. To accumulate P150,000 , uniform deposits every six months will be required for the
next 12 years . Determine the amount of each deposit if the applied nominal rate is 9% compounded
continuously .

A. P3 598 B. P 3 550 C P1 953 D. P7 448

__________2 .An ordinary annuity has a nominal interest rate of 6% if compounded semi-quarterly for eight
years . What is the capital -recovery factor ?

A. 50.68 B. .01223 C .01973 D. .0075

__________ 3. An oil company is planning to install a new 80 mm pipeline to connect storage tanks to a
processing plant 1500 m away . The connection will be needed for the forseeable future . An annual interest
rate of 8% is assumed and an annual maintenance and pumping costs are considered to be paid in the
entireties at the end of the years in which their costs are incurred .

Initial Cost : $1 500

Service Life : 12 years
Salvage Value : $ 200
Annual Maintenance : $ 400
Pump cost /hr : $ 2.50
Pump operation : 600 hr /yr .

The Capitalized cost of running and maintaining the 80 mm pipeline is most nearly :

A. $15,000 B. $20,000 C $24,000 D. $ 27,000

PART II .Instruction .Draw the complete CASH FLOW DIAGRAM Show all the necessary computations Box your
final answer in your computation . Write your final answer on the space provided . (40 PTS)

_________1. To pay off a P100,000 loan , it is required that 20 semi-annual payments that increase by P500.00
be made .If the amount of the first payment is P2 854 which is due six months after the loan is made ,
determine the nominal rate of interest if compounded semi-annually .