Engineering Economy by Zahid A Khan, Arshad Noor Siddique, Brajesh Kumar | 9788131775974 | 8131775976 | Holooly

Engineering Economy [EXP-46067]

123 SOLVED PROBLEMS

Question: 10.2

A 15-year bond of ₹5,00,000 that has a dividend rate of 5% per year, payable semiannually, is currently for sale. If the expected rate of return of the purchaser is 8% per year, compounded semiannually, and if the inflation rate is expected to be 1.5% each 6-month period, what is the bond worth now

Verified Answer:

(a) Without inflatio adjustment: The semiannual di...

Question: 4.23

A CAD centre just purchased a CAD software for ₹ 50,000 now and annual payments of ₹5,000 per year for 8 years starting 4 years from now for annual upgrades. What is the present worth of the payments if the interest rate is 8% per year?

Verified Answer:

The cash flow diagram is shown in Fig. 4.35. Let...

Question: 4.15

A company invests ₹5 million each year for 10 years starting 1 year from now. What is the equivalent future worth if rate of interest is 10% per year.

Verified Answer:

The cash flow diagram is shown in Fig. 4.20. F = ...

Question: 4.11

A company is examining its cash flow requirements for the next 5 years. It expects to replace a few machines and office computers at various times over the 5-year planning period. The company expects to spend ₹45,000 two years from now, ₹40,000 three years from now and ₹25,000 five years from now.

Verified Answer:

The cash flow diagram is shown in Fig. 4.14. P = ...

Question: 4.34

A company makes payments on a semiannual basis only. Determine the effective interest rate per payment period for each of the following interest rate. (a) 12% per year, compounded monthly (b) 4% per quarter, compounded quarterly

Verified Answer:

(a) Here, PP = 6 months; r = 12% per year = 12/2 =...

Question: 4.9

A company manufactures transducers. It is investigating whether it should update certain equipment now or wait to do it later. If the cost now is ₹10,00,000, what will be the equivalent amount 5 years from now at an interest rate of 8% per year?

Verified Answer:

The cash flow diagram is shown in Fig. 4.12. F = ...

Question: 5.16

A company purchased a small equipment for ₹70,000. Annual maintenance costs are expected to be ₹1,850, but extra income will be ₹14,000 per year. How long will it take for the company to recover its investment at an interest rate of 10% per year?

Verified Answer:

0 = -₹70,000 + (₹14,000 - ₹1,850)(P/A,10%, n) (P/A...

Question: 8.2

A company purchased a small machine for ₹1,00,000. It paid sales taxes and shipping costs of ₹10,000. The installation cost of the machine is ₹5,000 and its estimated useful life is five years. The estimated salvage value of the machine at the end of its useful life is ₹ 10,000. Calculate (a) depr

Verified Answer:

Given

B = ₹1,00,000 + ₹10,000 + ₹5,000 = ₹1...

Question: 10.4

A company wants to buy an equipment. The management of the company considers the following two plans: Plan A: Buy now Plan B: Buy later If the company selects plan A, the equipment will be purchased now for ₹10,00,000. However, if the company selects plan B, the purchase will be deferred for 4 year

Verified Answer:

(a) Inflatio not considered: Calculate the W. valu...

Question: 4.14

A company wants to have enough money to purchase a new machine in 4 years. If the machine will cost ₹12,50,000 how much should the company set aside each year if the account earns 8% per year.

Verified Answer:

The cash flow diagram is shown in Fig. 4.19. A = ...

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