Principles of Engineering Economics with Applications 2nd. Edition by Zahid A. Khan, Arshad N. Siddiquee, Brajesh Kumar, Mustufa H. Abidi | 9781108458856 | 1108458858 | Holooly

Principles of Engineering Economics with Applications [EXP-51752]

146 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% for each 6-month period, what is the bond worth

Verified Answer:

(a) Without inflation adjustment: The semi-annual ...

Question: 4.23

A CAD center 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 u...

Question: 15.2

A civil engineer is interested in estimating the cost of skilled labor for the job done in a construction project. He finds that a project of a similar complexity and magnitude was completed 5 years ago at a skilled labor cost of ₹4,58,640. The ENR Skilled labor index was 510 then and now is 818.

Verified Answer:

Given data:

C_{o} = ₹4,58,640; I_{5} = 818...

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. [late...

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: 4.11

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:

P=F\left(P/F,i\%,2 \right)+F\left(P/F,i\%,3...

Question: 4.34

A company makes payments on a semi-annual 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 =...

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: 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. [late...

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+\left(₹14,000-₹1,850\right)\left...

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