CENG 196 – CE COMPETENCY APPRAISAL 1

Problem Set No. 03

Engineering Economy

Instructions: Answer the following questions on CE paper. Format your paper into two
columns for clarity, ensuring each question is accompanied by its complete
solution. Enclose your final answer for each question within a box. Submission
deadline: March 26, 2024.

1. The tag price of a certain commodity is for 100 days. If paid in 31 days, there is a
3% discount. What is the simple interest paid?
2. A machine having a first cost of P 60,000.00 will be retired at the end of 8 years.
Depreciation cost is computed using a constant percentage of the declining book
value. What is the total cost of depreciation, in pesos, up to the time the machine
is retired if the annual rate of depreciation is 28.72%?
3. One hundred thousand pesos was placed in a time deposit which earned 9%
compounded quarterly, tax free. After how many years would it be able to earn a
total interest of fifty thousand pesos?
4. A debt of x pesos, with interest rate of 7% compounded annually will be retired at
the end of 10 years through the accumulation of deposit in the sinking fund
invested at 6% compounded semi-annually. The deposit in the sinking fund every
end of six months is P 21,962.68. What is the value of x?
5. The present value of an annuity of R pesos, payable annually for 8 years, with the
first payment at the end of 10 years, is P 187,481.25. Find the value of R if money is
worth 5%
6. Determine the break-even point in terms of number of units produced per month
using the following data: (the costs are in pesos per unit)
Selling price per unit = 600 pesos
Total Monthly overhead expenses = 428,000 pesos
Labor cost = 115 pesos
Cost of materials = 76 pesos
Other variable cost = 2.32 pesos
7. What rate (%) compounded quarterly is equivalent to 6% compounded semi-
annually?
8. A new engine will cost P 12,000 with an estimated life of 15 years and a salvage
value of P 800 and guaranteed to have an operating cost of P 3,500 per year. The
new engine is considered as a replacement of the old one. The old engine is
considered as a replacement of the old one. The old engine had a total annual
cost of P 5,200 to operate. Determine the rate of return of the new investment using
6% sinking fund to cover depreciation, if the old engine could be sold now for P
2,000.
9. A time deposit of P 110,000 for 31 days earns P 890.39 on maturity date after
deducting the 20% withholding tax on interest income. Find the rate of interest per
annum.
10. Machine cost = P 15,000; Life = 8 years; Salvage Value = P 3,000. What minimum
cash return would the investor demand annually from the operation of this machine
if he desires interest annually at the rate of 8% in his investment and accumulates a
capital replacement fund by investing annual deposits at 5%?