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Handouts
LINK: Engineering Economy A
Topics:
Money and its Time Value
Cash Flow Diagrams
Simple Interest
Compound Interest
Discounts
Break-even Analysis
Exercises
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1. A man borrowed money from a bank with 23% simple interest. The interest is automatically deducted from the principal at the time the money is released. Find the actual interest did charged to him after 1 year. b. 25.12% c. 32.51% d. 21.28% 2. A mother borrowed P28,000 from Jan 18, 2010 to November 3, 2010 with 15% simple interest. Find the exact interest. b. P2,810.1 c. P3,540.8 d. P2,571.4 3. Find the future amount of P26,000 after 4.5 years, if the simple interest rate is 13%. a. P32,217 b. P38,141 c. P45,781 d. P41,210 4. The amount of machine worth P2200 is borrowed 18% simple interest. Find the amount after 8 months. a. P3,151 b. P4,051 c. P3,555 d. P2,464 5. XYZ Corporation manufactures book cases that it sells for P65 each. It costs XYZ P38,000 per year to operate its plant. The sum includes rent, depreciation charges on equipment, and salary payments. If the cost to produce one bookcase is P50, how many cases must be sold each year for XYZ to avoid taking a loss? a. 3,522 cases c. 2,000 cases d. 3,057 cases 6. A factory is running 70% efficiency with a fixed cost of P78,000, variable cost per unit of P135, selling price per unit of P380, and production capacity of 4500 units. What is the current profit of the factory if all products manufactured are sold? a. P608,762 b. P693,750 c. P640,888 d. P652,211 7. A company which manufactures generators has a production capacity of 260 motors a month. The variable costs are P160 per motor. The average selling price of the motor is P330. Fixed costs of the company amount to P18,000 per month which includes taxes. The number of motors that must be sold each month to break-even is closed to _____. a. 98 b. 100 c. 106 d. 112 8. A product has a current selling price of P1600. If its selling price is expected to decline at a rate of 13% per annum because of obsolesce, what will be the selling price 7 years hence? a. P521.6 b. P788.1 c. P603.6 d. P800.2 9. An equipment costs P28,000 today. If inflation rate is 11% per year and interest is 17% per year, what will the appropriate future value of the machine, adjusted for inflation, in 9 years? a. P294,264.3 c. P115,035.2 d. P120,350.2 10. Karding deposited P5,200 in a 11% account today. He intends to deposit another P15,000 at the end of two years. He plans to purchase in 10 years a machine worth P25,000. Calculate the money that will be left in his account 5 years after the purchase. a. P38,201.6 c. P43,100.1 d. P45,201.8 11. When will an investment of P22,000 double, if the effective rate is 5% per month? a. 2.93 b. 1.98 c. 1.18 d. 2.66 12. In how many years will an amount quadruple itself if the interest is 15% compounded quarterly? a. 7.32 years b. 8.22 years c. 10.03 years d. 9.41 years 13. In how many years will an amount triple itself if invested at 12% compounded annually? a. 9.69 years b. 10.22 years c. 8.32 years d. 7.12 years 14. Find the nominal rate which if converted semi-annually could be used instead of 11% compounded bi-monthly. a. 10.2% c. 12.7% d. 13.9% 15. A sum of money is deposited now in a savings account. The effective annual interest rate is 8% and interest is compounded monthly. How much money must be deposited to yield P8200 at the end of 10 month? a. P2,827.3 b. P4,119.1 c. P3,694.3 d. P2,561.0 16. A machine has a compound interest of P2,950 when invested at 12% compounded bi-monthly after 12 years. Find the present amount of the investment. a. P821.0 b. P920.1 c. P855.5 d. P933.2 17. Mr. Castro borrows P1,200. In 3 years the money become P2,820 compounded bi-monthly. Find the nominal interest. a. 20.6% b. 26.1% c. 29.2% d. 32.5% 18. Find the compound amount and interest if P3,800 is invested at 13% compounded quarterly for 6 years and 8 months. a. P7,921.2 b. P8,410.0 c. P8,916.3 d. P7,129.1 19. You are given the option to borrow P4,300 you need for one year. Which of these will you pay lesser interest? To borrow from a friend at an interest rate of 1.2% per month or a loan from a bank at 20% per year? a. P32.3 b. P42.8 d. 59.7 20. If the nominal interest rate is 4.8%, how much is P8,000 worth in 15 years in a continuous compounded account? a. P15,672.22 b. P16,435.47 c. P18,287.11 d. P16,317.19 21. P3,623 was deposited in a bank account, 13 years ago. Today it is worth P35,431. Interest is paid semi-annually. Find the interest rate paid on this account. a. 18.33% b. 16.72% c. 14.29% d. 22.08% 22. A sum of P4,800 is invested now and left for 8 years, at which time the principal is withdrawn. The interest that has occurred is left for another 4 years. If the effective annual interest rate is 9%, what will be the withdrawal amount at the end of the 12th year? a. P7,672.1 b. P6,880.2 c. P6,201.8 d. P6,725.2 23. If P9,000 shall accumulate for 11 years at 15% compounded quarterly. Find the compound interest at the end of 11 years? a. P38,910.4 c. P32,019.5 d. P30,918 24. An employee deposited an amount of P220,500 after his retirement 8 years ago. The money is now worth P1,000,000. Find the annual interest received. a. 18.2% b. 28.3% c. 20.8% d. 26.1% 25. P63,000 is invested in the bank at 6.5% compounded monthly for 8 years. Find the amount earned of the investment. a. P34,891.15 b. P42,819.15 c. P48,991.51 d. P54,756.22 26. The company wanted to receive P550,000 seven years from now. Considering an interest of 13.6% compounded semi-annually, find the amount must be deposited in the bank to receive the amount after seven years. a. P227,091 b. P218,960 c. P256,012 d. P289,881 27. P18,000 is borrowed at 10% interest compounded quarterly for 10 years. Find the amount after 10 years. a. P40,281 b. P42,912 c. P48,331 d. P45,901 28. A machine has a selling price of P480,000 after given 16% discount. Find the original amount. a. P479,910 b. P571,428 c. P520,019 d. P550,150 29. A man borrowed P380,000 from a bank and agreed to pay the loan at the end of a month. The bank discount the loan and give him P280,000. What is the rate of discount? a. 26.32% b. 28.21% c. 21.28% d. 32.71% |
Break-even Analysis
| Break-even Analysis |
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A factory is engaged in fabrication of an automotive part with a production capacity of 700,000 units per year is only operating at 62% of capacity due to unavailability of the necessary foreign currency to finance the importation of their materials. The annual income is P430,000; annual fixed cost are P190,000; and variable costs are P0.348 per unit. Find the current profit/loss and the number of units to be fabricated for break-even. SOLUTION: |
