The University of Jordan

School of Engineering
Civil Engineering Department
CE 0901420 Engineering Economy Summer, 2021 – 2022
Take-home Quiz Due Date: Friday, Sep. 2nd, 2022
Name: Razan Ziad Sabra Student Number: 0193091

Instructions
- This assignment (take-home quiz) is worth 15 points and it contains 2 problems.
- This is an individual assignment (no groups). Any signs of cheating will result in a zero
score for this assignment and may result in an F grade in the class.
- Use this Microsoft Word File (or using a spreadsheet) by typing any necessary
equations, formulas, or text onto the same file, and make sure that your work is well-
organized and presented neatly. Messy work will not receive the full mark even if the math
is correct.
- Print your name/student number, save the file as a PDF document, and upload it to
eLearning (scanned copies will not be accepted, you can upload your spreadsheet
work).
- The deadline for submission is at 11:55 pm on Friday, Sep. 2nd, 2022. Late submissions
will receive a zero score.
-
❖ Problem 1
Using Microsoft Excel, create an investment cash-flow diagram that will have a present worth of
zero using MARR = 10%. The study period needs to be exactly 7 years and each year should have
at least one unique cash flow that is different from the cash flows over the other years. Your answer
should contain a table showing the cash flows for each year and a graphical representation of the
cash flows (cash-flow diagram).

EOY cash flow

0 -99182.1
1 10000
2 14000
3 22000
4 25000
5 23000
6 27000
7 30000

PW 0
❖ Problem 2
Groundwater well is known to begin pumping sand once it becomes exploited (old), and this may
damage the subsequent water treatment processes. To solve this problem, two alternatives are
proposed:
- A new well can be drilled at a capital cost of $580,000 with minimal operating and
maintenance expenses of $11,500 per year.
- A settling tank can be constructed ahead of the treatment processes, costing $230,000 to
build and $42,400 per year to operate and maintain.
The salvage value of either option at EOY 20 is 10% of the capital investment. Using a MARR of
5%:
(a) Which alternative is better for the 20-year study period?
(b) Use a spreadsheet solver to determine a study period that will make the two alternatives
equally acceptable (it is okay if the number of years is not an integer, you can also use a
trial and error process followed by interpolations. However, the spreadsheet would be
easier and will save time [Spreadsheet answer would be preferable]).

a ) To determine which alternative is better we should know the net present

value (NPV) of each alternative .
First , find the present worth factor (P) from the table :
(P/A , i=5% , N= 20) = 12.4622
Then , calculate the net present value (NPV) of costs of the (new well) :
-$580,000 - ($11,500*12.4622) + ($580,000 * 10% / (1.05)^20) = - $701,456
Also, (NPV) of costs of the settling tank :
-$230,000 - ($42,400*12.4622) + ($230,000 * 10% / (1.05)^20) = - $749,729
So, the new well (alternative 1) is better because it’s NPV is the least .
b)
-$580,000 - ($11,500* (1-(1.05)^-n) / 0.05) + ($580,000 * 10% / (1.05)^n) … equ1
-$230,000 – ($42,400* (1-(1.05)^-n) / 0.05) + ($230,000 * 10% / (1.05)^n) … equ2
By using trial and error method , we found that if the n = 15.9 the equ1 gives
answer = -677030 , and equ2 gives answer = -677420 , so the no. of years = 15.9.