NAME:________________________ ____ SID:_____________________

GENG-3130 (01 & 02) Engineering Economics Tutorial Assignment #4

Due: 12PM, October 8, 2021 (submission through Blackboard only, no e-mail submission)
Problem #1: Gwen just bought solar panels to power ventilation at her chicken farm. The panels cost
$2000 and will reduce her electricity bills by $40 per month. How long will it take her to recoup her
investment in the panels if she can warn 12% interest, compounded monthly, on her money? (Hint:
You can use either the Capital Recovery Factor formula or the Series Present Worth Factor
formula, or you can use linear interpolation!)

GAs on duty: Javad Mohammadi, Arina Kouchakzadeh, Marko Veliz Castro, Sriharisha Gudapati
NAME:________________________ ____ SID:_____________________

Problem # 2: Your company has a $500,000. loan for a new robotic machining center it just bought.
The interest rate for this loan is 6% per year and your company’s initial plan is to pay for the loan in
exactly 30 years. Annual payment is made at the end of each year.
(a) What is the Annual Payment your company has to pay at the end of each year?
(b) Based on the initial annual payment calculated above, your company has now decides that it
can afford to pay $50,000 per year, which is more than the initial annual payment. By paying
$50,000 annually, how many payments (years) will the loan of $500,000. Be paid off?
Assuming the same interest rate is used, i.e. 6% annually.
(c) By paying $50,000 annually, how much is the last payment?

GAs on duty: Javad Mohammadi, Arina Kouchakzadeh, Marko Veliz Castro, Sriharisha Gudapati
NAME:________________________ ____ SID:_____________________

Problem #3: A bond with face value of $5,000 pays quarterly interest of 1.5% each period. Twenty
six (26) interest payments remain before the bond matures. How much would you be willing to pay
for this bond today if the next interest payment is due now and you want to earn 8% compounded
quarterly on your money?
Note: Coupon Rate is 1.5% per quarter. Interest rate is 2% per quarter.

GAs on duty: Javad Mohammadi, Arina Kouchakzadeh, Marko Veliz Castro, Sriharisha Gudapati
NAME:________________________ ____ SID:_____________________

Problem #4: For the following cash flows, calculate the Present Worth at an interest rate of 10%.

Hint:

GAs on duty: Javad Mohammadi, Arina Kouchakzadeh, Marko Veliz Castro, Sriharisha Gudapati