ENG 221 ENGINEERING ECONOMICS FINAL EXAM REVIEW

Study the following problems:

1. An Indomie Plant is estimated to cost N 2 Million and the expected annual revenue is N800,000.00 for 4 years. Salvage value is 10 % of the investment. Annual operation and maintenance costs are N300000.00. Taxes and insurance is 5 % of the first cost per year. If the owner wants his capital investment to earn 25 % before income tax, evaluate if this project is profitable or not. Discuss the result. Evaluate by a) Rate of Return Method (ROR) b) Annual worth method

Classroom Quiz

2. An Enugu Charcoal Stove Company is producing a stove at a cost of N2000.00 per unit. Other fixed cost per year is estimated to be N60,000.00. The company sells the stove at N3000.00 each. Determine the number of stoves to be produced per year to breakeven.

3. To make calculation easier for Economics a student buys a laptop which costs N100,000.00 and has a salvage value of N20000.00 after 5 years. Determine the depreciation charge during the second year using a) straight line b) declining balance c) 150 % declining balance d) double declining balance e) sum of the years digit method.

4. Find the interest and the amount after 200 days of the N2000.00 loaned at 10 % ordinary simple interest.

5. Determine the amount of compounded interest earned for a N 600,000.00

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deposited in a bank at a rate of 10 % compounded monthly for 6 years and 6 months.

6. Determine the number of years required for a N20,000.00 will be increased by N 5,000.00 if the interest rate is 14 % compounded semi annually ?

7. A parent deposited N 5000.00 in a bank 30 years ago. Today it is worth N 12,000.00 . Interest is paid semi annually. Determine the interest rate paid on this account.

8. Determine the accumulated amount and present worth of a 10 year annuity paying N 7000.00 at the end of each year with interest at 14% compounded annually?

8. What is the amount to be deposited at the end of every month at interest rate of 10% compounded quarterly so that it becomes N 40641.00 after 4 years?

9. A student deposited n 2000.00 in a bank at 15% annual interest at the end of each year. If the student is now 20 years old, how old the student be when the fund accumulated to N 1 million?

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