IE 492
Homework- Engineering Economy
Part
I
1.) A 100 share of XYZ Co. is estimated to increase in price by 8% a year. If the present price is $15 a share how much should these shares be worth at the end of 5 years?
2.) A project is expected to take two years
to complete and at that time be worth $300,000. If
money is worth 25% a year, how much can the
initial investment be to make the 25% annual return
3.) An individual makes 5 annual deposits
of $4,000 that pays 5% a year. One year later
the cash deposit interest changes to 7% a year. Four
years after the last deposit the money is withdrawn.
How much would this be?
4.) NJIT has to replace its police cars
every three years. Assume their cost is
$20,000 each and have a $3,000 salvage value, at trade in time. How much must the school set aside into a fund 6%
annually to be able to have enough money to replace the cars?
5.) $20,000 is spent on an information
system to improve productivity of a shipping department.
What annual saving has to be realized to recover this expenditure in 5 years
if cost of money is 10%?
6.) How much can be paid for a copyright
that produces $15,000 a year in royalty income for 5 years if the purchaser wants to have
20% annual rate of return?
7.) An individual needs $25,000. His bank will lend him the money to be repaid over
a 5-year period every six months at an interest cost of 10% a year. What is the amont that has to be repaid every six
months?