KING ABDULAZIZ UNIVERSITY

FACULTY OF ENGINEERING
DEPARTMENT OF INDUSTRIAL ENGINEERING

Mark
______
12

Submittion Date: ./../, Time: :.

HW #
1

Chapter

Exercises

14, 16, 18, 19, 24

ID No.
Name
Section
Instructor

DA
01

AA
02

BA
03

Dr. Manzoor
Sheikh

GA XA1 XA3
04 05 06

Dr. Wael
Hassanain

CA
07

FA
08

EA
09

Eng. Abubaker
Ishaq

FB XA2 XA4
10 11 12

Eng. Mohammed
Alharkan

CAG
13

EAG
14

Eng. Wafa Abu

Hessain

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Fall 2014/2015
ST

Text Book: Basics of Engineering Economy, Blank, Leland T. and Tarquin, Anthony J. 1 Ed., 2008, McGraw-Hill, ISBN 9780071287623.

Q1. (based on Problem 1.14; page 24)

In order to build a new warehouse facility, the regional distributor borrowed $1.6 million at 10% per
year interest. If the company repaid the loan in a lump sum amount after 2 years, what was:
a. the amount of the payment and
b. the amount of interest?
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Q2. (based on Problem 1.16; page 24)
If a company borrowed the money 1 year ago at an interest rate of 8% per year and the total cost of
repaying the loan was $82 million, what was the amount of the original loan?
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HW#1

1 out of 3

Q3. (based on Problem 1.18; page 24)

How many years would it take for an investment of $275,000 to accumulate to at least $420,000 at
15% per year interest?
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Q4. (based on Problem 1.19; page 24)
A company is considering purchasing a new system. The company can finance a $150,000 system at
5% per year compound interest or 5.5% per year simple interest. If the total amount owed is due in a
single payment at the end of 3 years,
a. which interest rate should the company select, and
b. how much is the difference in interest between the two schemes?
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HW#1

2 out of 3

Q5. (based on Problem 1.24; page 24)

If a firm wants its investments to double in value in 4 years, what rate of return per year would it
have to make,:
a. on the basis of simple interest? and
b. on the basis of compound interest?
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HW#1

3 out of 3