UNIVERSITI TEKNOLOGI MALAYSIA
TEST 2 1 HOUR
ENGINEERING ECONOMY
QUESTION
i. Look up the numerical value for the following factors from the interest tables.
1. ( P_F ,6%,8)
2. ( A_P ,10%,10)
3. ( A_G ,15%,20)
4. ( A_F ,2%,30)
5. ( P_G ,35%,15)
[10 MARKS]
ii. Pyramid Energy requires that for each of its offshore wind power generators $5000 per year be placed into a capital reserve fund to cover unexpected major rework on fi eld equipment. In one case, $5000 was deposited for 15 years and covered a rework costing $100,000 in year 15. What rate of return did this practice provide to the company? Solve by hand and spreadsheet.
[10 MARKS]
iii. A family that won a $100,000 prize on America’s Funniest Home Videos decided to put one-half of the money in a college fund for their child who was responsible for the prize. If the fund earned interest at 6% per year, how much was in the account14 years after it was started?
[10 MARKS]
iv. CGK Rheo systems makes high-performance rotational viscometers capable of steady shear and yield stress testing in a rugged, compact footprint. How much could the company afford to spend now on new equipment in lieu of spending $200,000 one year from now and $300,000 three years from now, if the company uses an interest rate of 15% per year?
[20 MARKS]
