COLLEGE OF ENGINEERING

3rd Tri, SY 2021-2022

ENGG522 – ENGINEERING ECONOMY
Assignment 2
Total Points: 30

Student ID Student Name

Course Code ENGG522 Course Title ENGINEERING ECONOMY Section

(10 points each)

DIRECTIONS: SOLVE THE FOLLOWING PROBLEMS SHOWING FULL ANSWER

1. Consider the following data on a car:

Cost basis of the asset, CO = BD 10,000
Useful life, N = 5 years
Estimated Salvage value, CL = BD 2,000
Compute the annual depreciation allowances and the resulting book values. Using straight line method.

2. Consider the following data on a car:

Cost basis of the asset, CO = BD 5423
Useful life, N = 2 years
Estimated Salvage value, CL = BD 2,000
Interest rate, i = 15%
Compute the annual depreciation allowances and the resulting book values. Using sinking fund method.

3. Calculate the annual depreciation and book value of the construction equipment using declining balance
method. The interest rate is 8% per year. Co= BD 3,500,000 - Sv = BD 500,000 n = 10 years.

*********************************END OF QUESTIONS************************************
Rubrics scoring:

For 10 marks
10 marks: correct answer
6-9 marks: maximum correct answer
1-5 marks: minimum correct answer
0 mark: No answer or wrong answer.

Prepared by: Reviewed/Checked by: Verified by: Approved by:

Engr. Zahra Merza Dr. Essam Alnatsheh Dr. Beda T. Aleta

Subject Coordinator Department Head Dr. Noaman M. Noaman
Associate Dean College Dean
Date : July 3,2022 Date : July 3,2022 Date : July 3,2022 Date : July 3,2022
 (a) Computation of annual depreciation allownaces and Book Values

Cost of asset =$10,000

Useful life =5 years
Estimated salvege Value =$2000
Depreciation per year = (Cost - salvege value) / Number of years =($10,000 -$2000) /5
=$1600

Closing
Year Opening value Depreciation Book
value
1 10000 1600 8400
2 8400 1600 6800
3 6800 1600 5200
4 5200 1600 3600
5 3600 1600 2000

(b) Depreciation under Double declining method

Declining balance rate = 2* (1/ Useful life) = 2* (1/5) =40%

End of year Depreciation Book value

1 0.4*$10,000 =$4000 $10,000 - $ 4000 =$6000
2 0.40*$6000=$2400 $6000-$2400=$3600
3 0.40*$3600=$1440 $3600-$1440=$2160
4 0.40*$2160=$864 $2160-$864=$1296
5 ($1296-$778) =$518 $778

Prepared by: Reviewed/Checked by: Verified by: Approved by:

Engr. Zahra Merza Dr. Essam Alnatsheh Dr. Beda T. Aleta

Subject Coordinator Department Head Dr. Noaman M. Noaman
Associate Dean College Dean
Date : June 1,2022 Date : June 1,2022 Date : June 1,2022 Date : June 1,2022
 Q3

Answer:
Cost: $3,500,000.00, Salvage: $500,000.00
Life: 10 years, Factor: 1.5
Convention: Full-Month
First Year: 6 months

Depreciation

Year Depreciation Expense

2022 $ 262,500
2023 $ 485,625
2024 $ 412,781
2025 $ 350,864
2026 $ 298,234
2027 $ 253,499
2028 $ 215,474
2029 $ 183,153
2030 $ 155,680
2031 $ 132,328
2032 $ 56,239

Prepared by: Reviewed/Checked by: Verified by: Approved by:

Engr. Zahra Merza Dr. Essam Alnatsheh Dr. Beda T. Aleta

Subject Coordinator Department Head Dr. Noaman M. Noaman
Associate Dean College Dean
Date : June 1,2022 Date : June 1,2022 Date : June 1,2022 Date : June 1,2022