26 Various FE Exam Solutions

Page 1

SOLUTIONS

FOR

THE

EIT

SIMULATED

EXAM

ENGINEERING ECONOMICS

An automobile costs $5000.00 and has an estimated life of 5 years. Expenditure of extra money on certain additional maintenance items will extend this life to 10 years. Interest is 12.5% l.How much should be spent for this additional maintenance? b. $450 a. $500 d. $350 c. $400 e. $300 As= P(A/P) i = 12.5%, n = 5: 5000(.2809) = $1404.50 A 10 = P(A/P) i = 12.5%, n = 10: 5000(.1806) = $903 As- A 10 = 1404.50- 903 = 501.50 Answer (a) 2. What annual payment is required in order to have the renewal cost available in 5 yrs? a. $960 b. $840 c. $780 d. $690 e. $573 As= F(A/F) i = 12.5%, n = 5: 5000(.1559) = $779.50 Answer (c) 3. If the interest rate was reduced to 12% per annum, compounded monthly, what is the effective interest rate? b. 12.35% a. 12.25% d. 12.7% c. 12.5% e. none of the above i = 12%112 mo = 1%/mo (F/P) i = I%, n = 12 = 1.1268 Effective i = 1.1268- 1 = .1268 Answer(d) 4. If expenditures such as gasoline, oil, tires, batteries, etc., amount to $2300 per year, insurance costs $1000 per year, what is the annual cost of owning this car for the 5 year life if the salvage value is $1 000? a. $43,000.00 c. $4,548.60 e. $3,829.25

b. $4,147.50 d. $4,829.25

TAC = [(P- L)(A/P) + Lj] + AE = [(5000- 1000)(.2809) + (1000)(.125)] + 2300 + 1000 = 4548.60 Answer (c)

-

SESSION PM badoo.ge#EEEgaeff

13-45


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.