COLLEGE OF ENGINEERING

Columban College, Inc.

CEV417 - Engineering Economy
AY2018-2019 1st Semester - Prelim
Jan Alexis Monsalud
31 August 2018

Name: Number: Score:

Instructions Solve the following problems. Use separate sheets of bond paper to write your solutions (to be
attached). Write and box your final answers on the first page of your solution sheets.

1. The monthly demand for ice cans being manufactured by Engr.Roger is 3,200 pieces. With a manually operated
guillotine, the unit cutting cost is P 250. An electrically operated hydraulic guillotine was offered to him at
a price of P 2,750,000 which reduces by 30% the unit cutting cost. Disregarding the cost of money (interest
rate), how many months will Engr.Roger be able to recover the cost of the machine if he decided to buy now?
2. Annie buys a television set from a merchant who asks for P 12,500 if paid at the end of 60 days. However,
Annie wishes to pay immediately and the merchant offers to compute the cash price now. What is the cash
price today if money is worth 8% simple interest?
3. A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note
promising to pay P 5,000 per month at the end of 4th, 6th and 7th months, respectively. Determine the amount
he received from the bank.

4. A certain property is being sold and the owner received two bids. The first bidder offered to pay P 400,000
each year for 5 years, each payment is to be made at the beginning of each year. The second bidder offered to
pay P 240,000 first year, P 360,000 the second year and P 540,000 each year for the next 3 years, all payments
will be made at the beginning of each year. If money is worth 20% compounded annually, which bid should
the owner of the property accept?
5. If P 100, 000 is deposited each year for 9 years, how much annuity can a person get annually from the bank
every year for 8 years starting 1 year after the 9th deposit is made? Cost of money is 14%.
6. What amount of money invested today at 15% interest can provide the following scholarships: P 30,000 at the
end of each year for 6 years; P 40,000 for the next 6 years and P 50,000 thereafter?