100 Solved

Problems in
(Engineering
Economy)
 Interest (p. 1)
 Equation of Values (p. 2)
 Compounded continuously
(p. 2)
 Discount (p. 2-3)
 Inflation (p. 3)
 Annuity (p. 3 - 4)
 Capitalized Cost (CASE 1) (p. 5)
 Comparing Alternatives (p. 5 - 6)
 Capitalized Cost (CASE2 & 3) (p. 6)
 Depreciation(p. 6- 7)
 Uniform Arithmetic Gradient(p. 7)
 Geometric Gradient(p. 7)
 Bonds(p. 8)
 Present Economy(p. 8-9)
 Methods for Making Economic Study(p.
9-10)
CE DEPARTMENT
HOLY ANGEL UNIVERSITY
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HOLY ANGEL UNIVERSITY – CE DEPARTMENT

ENGINEERING ECONOMY

*INTEREST

1. Determine the ordinary simple interest on ₱700 for 8 months and 15 days if the rate of interest is
15%.
a. P74.38 b. P84.38 c. P94.38 d. P104.38

2. Determine the exact simple interest on ₱500 for the period from January 10 to October 28, 1996 at
16% interest.

a. P73.83 b. 0 c. P63.83 d. 20

3. What will be the future worth of money after 14 months, if a sum of ₱10,000 is invested today at a
simple interest rate of 12% per year?

a. ₱11400 b. ₱22400 c. ₱33400 d. ₱44400

4. Find the nominal rate which if converted quarterly could be used instead of 12% compounded
monthly. What is the corresponding effective rate?

a.21.68% b. 12.68% c. 15.68% d. 18.68%

5. Find the amount at the end of two years and seven months if P1000 is invested of 8% compounded
quarterly using simple interest for anytime less than a year interest period.

a. P4226.336 b. P3226.336 c. P2226.336 d. P1226.336

6. A P2000 loan was originally made at 8% simple interest for 4 years. At the end of this period the
loan was extended 3 years, without the interest for 4years. At the end of this interest rate was
made 10% compounded semi-annually.

How much should the borrower pay at the first 4 years?

a. P2905 b. P2500 c. P2640 d. P2000

7. How much should the borrower pay at the end of 7 years?

a. P3005.11 b. P3537.86 c. P2640.51 d. P3800.02

SITUATION 1: What payment amount 15 years from now is equivalent to a payment of Php 3,500 five years from
now, if interest is 11% and is compound?

8. [a] Compounded semi-annually

a. P 10,212.15 b. P 21,212.15 c. P 11,111.11 d. P 9,876.54

9. [b] Compounded monthly

a. P 11,462.02 b. P 12,462.02 c. P 10,462.02 d. P 9,462.02

10. If you have to invest, which is better: 12% compounded semi-annually or 12% compounded monthly?

a. compounded monthly b. compounded semi-annually c. both a & b d. none

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*EQUATION OF VALUES

11. A man bought a lot worth P1,000,000 if paid in cash. On installment basis, he paid a down payment
of P200,000; P300,000 at the end of one year. P400,000 at the end of three years and a final
payment at the end of five years. What was the final payment if interest was 20%?

a. P792, 576 b. P877, 522 c. P999, 999 d. P671, 123

*COMPOUNDED CONTIUOUSLY

SITUATION 2: How many years are required for your money to triple if it is invested at 9% compounded?

12. [a] annually

a. 12.48yrs b. 12.34yrs c. 12.75yrs d. 12.21yrs

13. [b] semi-annually

a. 12.48yrs b. 12.34yrs c. 12.75yrs d. 12.21yrs

14. [c] quarterly,

a. 12.48yrs b. 12.34yrs c. 12.75yrs d. 12.21yrs

15. [d] continuously?

a. 12.48yrs b. 12.34yrs c. 12.75yrs d. 12.21yrs

16. What is the accumulated amount after 3 years of P1, 000 invested at the rate of 8% per year
compounded continuously?

a. P1, 777.25 b. P1, 271.25 c. P1, 721.25 d. P1, 127.25

*DISCOUNT

SITUATION 3: Mr. J. Dela Cruz borrowed money from a bank. He received from the bank P1, 342 and promises
to pay P1, 500 at the end of 9 months. Determine the following:

17. a) Rate of discount (Banker’s Discount).

a.10.53% b. 15.70% c. 17.65% d. 11.77%

18. b) Rate of interest.

a.10.53% b. 15.70% c. 17.65% d. 11.77%

19. c) Rate of interest for one year

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a.10.53% b. 15.70% c. 17.65% d. 11.77%

20. A man borrows P10, 000 from a loan firm. The rate of simple interest is 15%, but the interest is
to be deducted from the loan at the time the money is borrowed. At the end of one year, he has to
pay back P10, 000. What is the actual rate of interest?

a.10.53% b. 15.70% c. 17.65% d. 11.77%

*INFLATION

21. A certain product presently costs P500.If inflation rate is at the rate of 6% per year, what will
be the cost of this product in 4years?

a. P 631.24 b. P 731.24 c. P 531.24 d. P 831.24

22. In year zero, you invest P10, 000 in a 15% security for 5 years. During that time, the average
annual inflation is 6%. How much, in terms of year zero pesos will be in the account at maturity?

a. P12, 000.03 b. P13, 123.50 c. P21, 130.03 d. P15, 030.03

23. An economy is experiencing inflation of an annual rate of 8% if this continuous what will be P1000
be worth two years from now in term of today pesos?

a. P757.34 b. P857.34 c. P657.34 d. P957.34

*ANNUITY

SITUATION 4: What are the present worth and future worth of P600 deposited at the end of every month for
4 years if the interest rate is 12% compounded quarterly?

24. What is the present worth?

a. P22, 835.43 b. P21, 538.15 c. P23, 225.78 d. P36, 641.32

25. What is the future worth?

a. P22, 835.43 b. P21, 538.15 c. P23, 225.78 d. P36, 641.32

26. The buyer of a certain machine may pay either P2, 000 cash down payment and P2, 000 annually for
the next 6 years, or pay P3, 500 cash and P2, 000 annually for the next 5 years. If money is worth
12% compounded annually, which method of payment is better for the buyer and by how much?

a. 1ST CHOICE, P486.74 b. 2ND CHOICE, P991.23 c. 1ST CHOICE, P 684.74 d. 2ND CHOICE, P563.23

27. How much money would you have to deposit for five consecutive years starting one year from now if
you want to be able to withdraw P50, 000 ten years from now? Assume the interest is 14% compounded
annually.

a. P 3,289.25 b. P 3,892.82 c. P 3,928.60 d. P 3,982.75

28. A corporation will make the following disbursements:

 P50,000 on Dec. 31, 1991

 P100,000 on Dec. 31, 1992
 P200,000 on Dec. 31, 1993

To accumulate these sums, a sinking fund is established by making equal year-end deposits starting
Dec. 31, 1986 up to the end of 1993. If the fund earns 9% interest compounded annually, what is the
required amount of the annual deposit?

a. P33, 404.89 b. P33, 555.99 c. P33, 786.98 d. P33, 123.66

ENGINEERING ECONOMY
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SITUATION 5: A man bought a property and he paid Php 100 000 cash and agreed to pay Php 20 000 at the end
of each 6 months for 5 years. He failed to pay the first 5 payments. At the end of 3 years, he is
required to pay by the seller the entire debt consisting of his accumulated and future liabilities,
otherwise the farm would be foreclosed by the seller.

29. What is the Present Worth?

a. P274, 102.447 b. P247, 201.741 c. P244, 012.14 d. P248, 221.74

30. What must he pay if money is worth 12% compounded semi-annually?

a. P288, 708.43 b. P218.556.32 c. P207, 153.62 d. 208,807.43

31. A lathe for a machine shop costs P60, 000 if paid in cash. On the installment plan, a purchaser
should pay P20, 000 down payment and 10 quarterly installments, the first due at the end of the
first year after purchase. If money is worth 15% compounded quarterly, determine the quarterly
installment.

a. P5999.12 b. P5693.64 c. P5439.18 d.P5878.56

32. A man invests P10, 000 now for the college education of his 2-year old son. If the fund earns 14%
effective, how much will the son get each year starting from his 18th to the 22nd birthday?

a. P20, 791.64 b. P21.556.32 c. P17, 153.62 d. 28,807.43

33. A person buys a piece of property for P100, 000 down payment and ten deferred semi-annual payments
of P8, 000 each starting three years from now. What is the present value of the investment if the
rate of interest is 12% compounded semi-annually?

a. P134, 898.26 b. P143, 999.08 c. P143, 019.15 d. P134, 190.51

34. A farmer bought a tractor costing P25000, payable in 10 semiannual payments, each instalment
payable at the beginning of each period. If the rate or interest is 26% compounded semiannually,
determine the amount of each instalment.

a. P5, 707.21 b. P4, 077.20 c. P3, 770.22 d. P5, 007.23

35. A certain manufacturing plant is being sold and was
submitted by interested buyers. The first bid offered to
payment is being made at the beginning of each year. The
first year, P180,000 the second year, and P270,00 each
being made at the beginning of each year. If money is
should the owner of the plant accept?
submitted for bidding. Two birds were
pay P200, 000 each year for 5 years, each
second bidder offered to pay P120,000 the
year for the next 3 years, all payments
worth 12% compounded annually, which bid

a. P241, 282.32 b. P242, 828.32 c. P240, 288.32 d. P241, 882.32

SITUATION 6: If money is worth 8% compounded quarterly, determine the present value of the following:

36. An annuity of P1, 000 payable quarterly for 50 yrs.

a. ₱50, 074.35 b. ₱49, 981.85 c. ₱49, 047.35 d. ₱50,000.00

37. An annuity of P1, 000 payable quarterly for 100 yrs.

a. ₱50, 074.35 b. ₱49, 981.85 c. ₱49, 047.35 d. ₱50,000.00

38. A perpetuity of P1, 000 payable quarterly?

a. ₱50, 074.35 b. ₱49, 981.85 c. ₱49, 047.35 d. ₱50,000.00

39. What amount of money invested today at 15% interest can provide the following scholarships: P30,
000 at the end of each year for 6 years; P40000 for the next 6 years and P50, 000 thereafter?

a. ₱241, 282.32 b. ₱242, 828.32 c. ₱241, 822.32 d. ₱242, 228.32

ENGINEERING ECONOMY
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*CAPITALIZED COST

40. Determine the capitalized cost of a structure that requires an initial investment of P1, 500,000
and an annual maintenance of P150, 000. Interest is 15%.

a. ₱2050.00 b. ₱5200.00 c. ₱2500.00 d. ₱2005.00

SITUATION 7: A car costs 1,500,000 and has an annual maintenance of 30,000. if the interest is 15%
compounded monthly:

41. Solve for the annual interest.

a. 16.08% b. 28.06% c. 32.12% d. 18.18%

42. Solve for the capitalized cost.

a. P1,686,619.95 b. P1,868,619.95 c. P1,787,619.95 d. P1,878,619.95

43. A manufacturing plant installed a new broiler at a total cost of P150, 000 and is estimated to
have a useful life of 10 years. It is estimated to have a scrap value at the end of its useful
life of P5, 000. If interest is 12% compounded annually, determine its capitalized cost.

a. P219, 952.86 b. P217, 588.86 c. P216, 935.86 d. P21, 855.86

*COMPARING ALTERNATIVES

SITUATION 8: An industrial plant has an engine costing P7200 which is now 5 years. Old its working lie is
15 years and salvage value of 500. The average operating cost per year thus far has been P4200. A new
engine costing P12, 000 with an estimated life of 15 years and a salvage value of P800 is guaranteed to
have an operating cost of P 3500 per year. The new engine is considered as a replacement of the old. Will
replacement be justified if P4500 can be obtained from the sale of the old engine?

44. Solve for the depreciation OLD engine. Use straight line depreciation with 6% interest

a. P400.00 b. P450.00 c. P500.00 d. P480.00

45. Solve for the depreciation NEW engine. Use straight line depreciation with 6% interest

a. P790.12 b. P746.67 c. P820.57 d. P680.97

46. Solve for the total cost of the Old engine.

a. P4600 b. P4246.67 c. P4625.00 d. P4200

47. Solve for the total cost of the New Engine.

a. P4600 b. P4246.67 c. P4625.00 d. P4200

48. Solve for the rate of return

a.15.30% b. 8.20% c. 4.17% d. 2.30%

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SITUATION 9: A plastic extrusion machine purchased 4 years ago has annual operating costs of P12, 000 and
is estimated to have a service life of 6 more years with salvage value of P4, 500. A new machine with the
same output will cost P42, 000, with annual operating costs of 7,200, a life of 12 years and salvage
value of P6, 000. For this class of asset, the manufacturer expects an 18% rate of return.

49. What are the depreciations? Use sinking fund method.

a.0.1059X – 476.55, P1030.60 b.0.2859X + P11, 523.45, P1030.60

c.0.2859X + P11, 523.45, P7560 d. NONE

50. Determine the minimum trade in value that the manufacturer should receive and still purchase the
new machine.

a. P15, 925.32 b. P14, 925.32 c. P16, 925.32 d. P17, 925.32

CAPITALIZED COST: CASE 2

51. What is the capitalized cost if an iShop Computer Services purchased a computer unit at a total
cost of P12, 000 with a useful life of 7 years? Scrap value at the end of its useful life is
P9, 000and the interest is 9% compounded annually.
a. P16251.08 b. P15623.01 c. P12653.63 d. P16253.36

52. A new engine was installed by a textile plant at a cost of P300, 000 and projected to have a
useful life of 15 years. At the end of its useful life, it is estimated to have a salvage value of
P30, 000. Determine its capitalized cost if interest is 18% compounded annually.
a. P213, 653.26 b. P231, 524.09 c. P321, 657.35 d. P320, 604.17

CAPITALIZED COST: CASE 3

53. Determine the capitalized cost of a research laboratory which requires P5,000,000 for original
construction; P100,000 at the end of every year for the first 6 years and then P120,000 each year
thereafter for operating expenses, and P500,000 every 5 years for replacement of equipment with
interest at 12% per annum?
a. P6 573 645.73 b. P6 563 523.68 c. P6 562 321.36 d. P6 685 325.51

SITUATION 10: A financial analysis of two types of bridges based on capitalized cost and on the following
data is to be made:

BRIDGE A BRIDGE B
INITIAL COST P 200,000 P 240,000
COST OF RENEWAL P 200,000 P 240,000
SALVAGE VALUE 0 P 20,000
ANNUAL MAINTENANCE P 1,000 NONE
REPAIRS EVERY 5 YRS P 10,000 P 5,000
LIFE YEARS 30 40
If the rate of interest is 8% compounded annually.

54. Determine the capitalized cost for Bridge A.

a. ₱ 235,635.66 b.₱ 252,315.38 c. ₱255,875.64 d. ₱225,325.37

55. Determine the capitalized cost for Bridge B.

a. ₱263,261.36 b. ₱236,216.63 c. ₱261,268.97 d. ₱216,628.79

56. Among the two types of bridges, what would you must choose? How much you’ll save?

a. BRIDGE A: P 5393.33 b. BRIDGE B: P 9560.26 c. BRIDGE A: P 9560.26 d. BRIDGE B: P 5393.33

DEPRECIATION (STRAIGHT LINE METHOD):

SITUATION 11: An electronic balance costs P90, 000 and has an estimated salvage value of P8, 000 at the
end of its 10 years life time. Use the straight line method.

57. What is the depreciation in three years?

a. 25, 300 b. 26, 400 c. 23, 500 d. P24, 600

58. What is the book value in three years?

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a. P63, 400 b. P65, 400 c. P64, 500 d. P64, 300

SITUATION 12: A tax and duty free importation of a 30HP sand mill (for paint manufacturing) cost
P360, 000, CIF Manila Bank charges brokerage cost P5, 000. Foundation and installation costs were P25,
000. Other incidental expenses amounted to P20, 000. Salvage value of the mill is estimated to be P60,
000 after 20 years.

59. Find the appraisal value of the mill, using straight line depreciation, at the end of 10 years.

a. P235, 000 b. P253, 000 c. P325, 000 d. P352, 000

60. Find the appraisal value of the mill, using straight line depreciation, at the end of 15 years.

a. P174, 560 b. P147, 560 c. P156, 740 d. P165, 470

61. A certain company makes it the policy that for any new piece of equipment the annual depreciation
cost should not exceed 10% of the original cost at any time with no salvage or scrap value.
Determine the length of service life necessary if the depreciation method used is straight line
formula.

a. 11.5 years b. 12 years c. 10 years d. 10.5 years

DEPRECIATION (SINKING FUND METHOD):

SITUATION 13: A broadcasting corporation purchased equipment worth P53, 000 and paid P1, 500 for freight
and delivery charges to the site. The equipment has a normal life of ten years with a trade-in value of
P5, 000 against the purchase of new equipment at the end of life. The interest is 6%.

62. What is the annual depreciation cost?

a. P3375.63 b. P1536.35 c. P3755.46 d. P3575.58

63. What is the total depreciation cost in 7 years?

a. P33 564.78 b. P31 522.75 c. P32 512.34 d. P30 658.14

64. What is the book value in 7 years?

a. P22 977.25 b. P29 277.75 c. P27 572.50 d. P25 775.15

DEPRECIATION (DOUBLE DECLINING BALANCE METHOD):

SITUATION 14: Determine the rate of depreciation, the total depreciation up to the end of the 8th year
and the book value at the end of 8 years for an asset that costs P15, 000 new and has an estimated scrap
value of P2, 000 at the end of 10 years by:
65. Using the declining balance method.

a. P12008.42 b. P12007.44 c. P12017.14 d. P12177.11

66. Using the double declining balance method.

a. P12158.42 b. P12381.44 c. P12817.14 d. P12483.42

UNIFORM ARITHMETIC GRADIENT

SITUATION 15: A loan was to be amortized by a group of four end-of-year payments forming an ascending
arithmetic progression. The initial payment was to be P5, 000 and the difference between successive
payments was to be P400. But the loan was negotiated to provide for the payment of equal rather than
uniformly varying sums. The interest rate of the loan was 15%.
67. Determine the present worth value.

a. P 14,279.89 b. P 17,699.18 c. P 14,189.91 d. P 13,299.85

68. What was the annual payment?

a. P 5, 960.23 b. P 5, 340.36 c. P 5, 530.5 d. P 5, 496.01

GEOMETRIC GRADIENT
SITUATION 16: Eleanor makes year-end deposits of P500 the first year, P550 the second year, P605 the
third year, and so on, increasing the next year’s deposit by 10% of the deposit in the preceding year
until the end of the tenth year. Ronald makes equal year-end deposits of P700 each year for 10 years. The
interest on both funds is 12% compounded annually.

69. How much will Ronald save for 10 years?

a. P 12, 802.65 b. P 12,284.11 c. P 12,134.11 d. P 12, 672.65

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70. How much will Eleanor save for 10 years?

a. P 12,284.11 b. P 12, 802.65 c. P 12,134.11 d. P 12, 672.65

71. Who will save more than the other and for how much?

a. Eleanor: 518.54 b. Ronald: 518.54 c. Eleanor: 598.14 d. Ronald: 598.14

BONDS
72. A bond issue of P200, 000 in 10-year bonds, in 1,000 units, paying 16% nominal interest in
semiannual payments, must be retired by the use of a sinking fund that earns 12% compounded
semiannually. What is the total semiannual expense?

a. P 21 136.91 b. P 23 136.91 c. P 23 436.91 d. P 21 436.91

73. A man wants to make 14% nominal interest compounded semiannually on a bond investment. How much
should a man be willing to pay now for a 12% P10, 000-bond that will mature in 10 years and pays
interest semiannually?

a. P 8940.6 b. P 8941.6 c. P 8140.6 d. P 8910.6

74. Mr. Romualdo bought a bond having a face value of P1, 000 for P970. The bond rate was 14% nominal
and interest payments were made to him semiannually for a total of 7 years. At the end of the
seventh year, he sold the bond to a friend at a price that resulted a yield of 16% nominal on his
investment. What was the selling price?

a. P 1, 165.03 b. P 1, 634.03 c. P 1, 154.03 d. P 1, 314.03

75. A P1, 000 – bond which will mature in 10 years and with a bond rate of 8% payable annually is to
be redeemed at par at the end of this period. If it is sold at P1, 030, determine the yield at
this price.

a. 7.56% b. 6.56% c. 5.56% d. 7.76%

PRESENT ECONOMY
76. The monthly demand for ice cans being manufactured by Mr. Cruz is 3,200 pieces. With a manually
operated guillotine, the cutting cost is P25.00. An electrically operated hydraulic guillotine was
offered to Mr. Cruz at a price of P275, 000 and which will cut by 30% the unit cutting cost.
Disregarding the cost of money, how many months will Mr. Cruz be able to recover the cost of the
machine if he decides to buy now?

a. 10.45 b. 11.46 c. 16.46 d. 13.46

77. A company manufactures 1,000,000 units of a product yearly. A new design of the product will
reduce materials cost by 12%, but will increase processing cost by 2%. If materials cost is P1.20
per unit and processing will cost P0.40 per unit, how much can the company afford to pay for the
preparation of the new design and making changes in equipment?

a. P 163,000 b. P 116,000 c. P 156,000 d. P 136,000

SITUATION 17: An electrical contractor has a job which should be completed in 100 days. At present, he
has 80 men on the job and it is estimated that they will finish the work in 130 days. If of the 80 men,
50 are paid P190 a day, 25 at P220 a day, and 5 at P300 a day and if for each day beyond the original 100
days, the contractor has to pay P2,000 liquidated damages:

78. How many more men should the contractor add so he can complete the work on time?

a. 23 b. 26 c. 25 d. 24

79. For the additional men, 5 are paid P220 a day and the rest at P190 a day, would the contractor
save money by employing more men by how?

a. Yes, P64 000 b. Yes, P84 000 c. No d. Maybe

SITUATION 18: The making of rivets holes in structural steel members can be done by two methods. The
first method consists of laying out the position of the holes in the members and using a drill press
costing P30, 000. The machinist is paid P35 per hour and he can drill 30 holes per hour. The second
method makes use of a multiple-punch machine costing P27, 500. The punch operator is paid P30 an hour and

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he can punch out 4 holes every minute. This method also requires an expense of P1.75 per hole to set the
machine.

80. If all other costs are assumed equal, what is the total cost for each machine for 6,000 holes,
assuming the total cost of each machine to be charged to these holes?

a. P37, 000: P38, 750 b. P27, 000: P28, 750 c. P36, 000: P37, 750 d. P35, 000: P36, 750

81. For how many holes will the costs be equal?

a. 3535 b. 3650 c. 3530 d. 3 455

SITUATION 19: Two workers, A and B, each produce 200 pieces of a product per hour. Because of defects, 2%
of the pieces produced by b are rejected. These defective pieces are repaired at a unit cost of p 0.60
per piece. The cost of materials per piece is p2.50

82. If each worker is paid p20.00 per hour, determine the cost per acceptable piece.
a. P2.70/PC b. P2.50/PC c. P2.60/PC d. P2.30/PC

83. How much should A receive per hour in order that his cost per acceptable piece will equal that of
B?
a. P 2240/HR b. P 2140/HR c. P 1240/HR d. P 3240/HR

SITUATION 20: A machine part to be machined may be made either from an alloy of aluminum or steel. There
is an order of 8000 units. Steel costs p.3.80 per kg while aluminum cost 8.70 per kg. If steel is used,
steel per unit weighs 110 grams; for aluminum, 30grams. When steel is used, 50 units can be produced per
hour; for aluminum, 80 units per hour with aid of a tool p640, which will be useless after the 8000 units
are finished. The cost of the machine operator is p10.80 per hour.

84. What is the total cost for aluminum?

a. P3818 b. P4429 c. P4424 d. P3808

85. What is the total cost for steel?

a. P3818 b. P4429 c. P4424 d. P3808

86. If all other costs are identical, determine which material will be more economical?

a. STEEL b. ALUMINUM c. BOTH A AND B d. NONE OF THEM

87. How much would you save?

a. P616 b. P515 c. P161 d. P151

METHODS FOR MAKING ECONOMIC STUDIES

SITUATION 21: An investment of P270, 000 can be made in a project that will produce a uniform annual
revenue of P185, 400 for 5 years and then have a salvage value of 10% of the investment. Out of pocket
costs for operation and maintenance will be P81, 000 per year. Taxes and insurance will be 4% of the
first cost per year. The company expects capital to earn not less than 25% before income taxes.

88. Is this a desirable investment? Using ROR Method what is the rate of return?

a. Yes, 26.7% b. No, 23.7% c. Maybe d. I don’t know

89. What is the payback period of the investment?

a. 2.3 years b. 2.1 years c. 2.6 years d. 2.5 years

SITUATION 22: A businessman is considering building a 25-unit apartment in a place near a progressive
commercial center. He felt that because of the location of the apartment, it will be occupied 90% at all
time. He desires a rate of return of 20%. Other pertinent data are the following:

 Land investment 5,000,000

 Building investment 7,000,000
 Study period 20 years
 Cost of land after 20 yrs 20,000,000
 Cost of building after 20 yrs 2,000,000
 Rent per unit per month 6,000
 Upkeep per unit per year 500

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 Property taxes 1%
 Insurance 0.5%
90. How much is the total outflow using rate of return?

a. P194 282.65 b. P149 682.13 c. P194 362.76 d. P149 282.13

91. How much is the total inflow using rate of return?

a. P1 600 437.37 b. P1 500 324.14 c. P1 700 347.96 d. P1 400 356.84

92. What is the rate of return of the investment?

a. 11.15% b. 12.55% c. 10.55% d. 9.15%

SITUATION 23: A firm is considering purchasing equipment that will reduce costs by P40,000. The equipment
costs P300,000 and has a salvage value of P50,000 and a life of 7 years. The annual maintenance cost is
P6,000. While not in use by the firm, the equipment can be rented to others to generate an income of
P10,000 per year. If money can be invested for an 8 percent return, is the firm justified in buying the
equipment.

93. How much is the total outflow using rate of return?

a. P33 018.6 b. P34 034.4 c. P34 018.1 d. P31 054.8

94. How much is the total inflow using rate of return?

a. P60 000 b. P40 000 c. P50 000 d. P35 000

95. Is it a desirable investment?

a. Yes b. No c. Maybe d. I don’t know

96. What was the rate of return?

a. 6.33% b. 5.33% c. 8.13% d. 6.13%

SITUATION 24: A man is considering investing P500, 000 to open a semi-automatic auto-washing business in
a city of 400,000 population. The equipment can wash, on the average, l2 cars per hour, using two men to
operate.it and to do small amount of hand work. The man plans to hire two men, in addition to himself,
and operate the station on an 8-hour basis, 6 days per week, 50 weeks per year. He will pay his employees
P25.00 per hour. He expects to charge P25.00 for a car wash. Out-of-pocket miscellaneous cost would be P
8,500 per month. He would pay his employees for 2 weeks for vacations each year. Because of the length of
his lease, he must write off his investment within 5 years. His capital now is earning 15% and he is
employed at a steady job that pays P25,000 per month. He desires a rate of return of at least 20% on his
investment.

97. How much is the total outflow using rate of return?

a. P700 957.78 b. P P650 957.78 c. P750 957.78 d. P600 957.78

98. How much is the total inflow using rate of return?

a. P620,000 b. P270,000 c. P720,000 d. P260,000

99. What was the rate of return? Would you recommend the investment?
a. Yes, 23.81% b. No, 13.81% c. Maybe d. I don’t know

100. What is the payback period of the investment?

a. 1.69yrs b. 2.36yrs c. 2.59yrs d. 1.46yrs

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ANSWER KEY

1. A 26. A 51. B 76. B

2. C 27. C 52. D 77. D

3. A 28. A 53. A 78. D

4. B 29. B 54. C 79. B

5. D
30. D 55. C 80. A

6. C
31. C 56. A 81. C

7. B
32. A 57. D 82. C

8. A
33. B 58. B 83. A

9. C
34. B 59. A 84. D

10. A
35. A 60. B 85. C

11. A
36. C 61. C 86. B

12. C
37. B 62. C 87. A

13. A
38. D 63. B 88. B

14. B
39. A 64. A 89. C

15. D
40. C 65. B 90. A

16. B
41. A 66. D 91. C

17. A
42. A 67. A 92. B

18. D
43. D 68. C 93. C

19. B
44. A 69. B 94. C

20. C
45. B 70. B 95. B

21. A
46. A 71. C 96. B

22. D
47. B 72. D 97. D

23. B
48. C 73. A 98. C

24. A
49. A 74. C 99. A

25. D
50. B 75. A 100. C

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SOLUTIONS

1. I=₱700(0.15)( 255/360)= P74.38

2. I=₱500(0.16)(292/366 )= P63.83

3. I=Pin
I=₱10,000(0.12)( 420/360)
I=₱1400
F=P+I
F=₱10,000 + ₱1400
F=₱11400

𝟎.𝟏𝟐 𝟎.𝟏𝟐
4. (1+ )4-1=(1+ )4-1
𝟒 𝟏𝟐
r= 12.1204%
n
ER=(1+i) -1
𝟏𝟐.𝟏𝟐𝟎𝟒
ER=(1+ )4-1
𝟒
ER=12.68%

𝟎.𝟎𝟖
5. F1=P1000(1+ )8
𝟒
F1= P1171.66
𝟎.𝟎𝟕
F2= P1171.66(1+ (0.08))
𝟒
F2= P1226.336

6. F1=P(1+i) n

𝟒
F1=P2000(1+𝟎. 𝟎𝟖 )
𝟏
F1=P2640

n
7. F1=P(1+i)
𝟎.𝟏𝟎 6
F1=P2640(1+ )
𝟐
F1=P3537.86

8. (𝐏𝟏𝟓 = 𝐏𝟓 )
F = P(𝟏 + 𝐢)𝐧
𝟎.𝟏𝟏 −𝟑𝟎 𝟎.𝟏𝟏 −𝟏𝟎
X [𝟏 + ] = P 3,500 [𝟏 + ]
𝟐 𝟐
X = P 10,212.15

9. (𝐏𝟏𝟓 = 𝐏𝟓 )
F = P(𝟏 + 𝐢)𝐧
𝟎.𝟏𝟏 −𝟏𝟖𝟎 𝟎.𝟏𝟏 −𝟔𝟎
X [𝟏 + ] = P 3,500 [𝟏 + ]
𝟏𝟐 𝟏𝟐
X = P 10,462.02

10. Compounded semi-anually

ER = (𝟏 + 𝐢)𝐧- 1
𝟎.𝟏𝟐 𝟐
ER = (𝟏 + ) - 1
𝟐
ER = 12.36 %

Compounded monthly
ER = (𝟏 + 𝐢)𝐧- 1
𝟎.𝟏𝟐 𝟏𝟐
ER = (𝟏 + ) - 1
𝟏𝟐
ER = 12.68 %
Therefore use 12.68% compounded monthly

11. Focal Point= 0 ; Present, 5; Future

P1,000,000(1.20)⁰ = P200,000(1.20)⁰ + P300,000(1.20)–1 + P400,000(1.20)–3 +F(1.20)–5
F= P792,576

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12. F = P(1+i)^n
3x = x (1+0.09)^1(n)
n = 12.75yrs

13. 3x = x (1+0.09/2)^2(n)
n = 12.48yrs

14. 3x = x (1+0.09/4)^4(n)
n = 12.34yrs

15. 3x = xe0.09n
n = 12.21yrs

16. F = Pe^rn
F = P1,000e^0.08(3)
F = P1,271.25

17. discount = FW-PW

=1,500-1,342
=P158
rate of discount = discount/FW
= 158/1,500
10.53%

18. rate of interest = discount/PW

= 158/1342
= 11.77%

19. I=Pin
158 = 1342 (i)(9/12)
i = 15.70%

20. FW= 10,000

PW= 10,000-0.15(10000) = P8,500
rate of interest (i)= ?
discount = FW-PW
=10,000 – 8,500
= 1,500
i = discount/PW
= 1500/8500
i = 17.65%

21. FC = PC(1 + f)n

= 500 (1 + 0.06)4
FC = P 631.24

22. P=P10,000
i=15%
f=6%
n=5yrs
𝟏 + 𝟎. 𝟏𝟓 𝟓
𝑭 = 𝟏𝟎, 𝟎𝟎𝟎 [ ]
𝟏 + 𝟎. 𝟎𝟔
F=P15,030.03

𝑷
23. 𝑭 = (𝟏+𝒇)𝒏
𝟏𝟎𝟎𝟎
=
(𝟏 + 𝟎. 𝟎𝟖)𝟐
F = P857.34

𝟎.𝟏𝟐 𝟒 𝒊 𝟏𝟐
24. (𝟏 + ) = (𝟏 + )
𝟒 𝟏𝟐
𝒊 = 𝟎. 𝟏𝟏𝟖𝟖 = 𝟏𝟏. 𝟖𝟖% 𝒎𝒐𝒏𝒕𝒉𝒍𝒚
𝟎. 𝟏𝟏𝟖𝟖 −𝟒(𝟏𝟐)
𝟏 − (𝟏 + )
𝑷 = 𝟔𝟎𝟎 ( 𝟏𝟐 ) = 𝑷𝟐𝟐, 𝟖𝟑𝟓. 𝟒𝟑
𝟎. 𝟏𝟏𝟖𝟖
𝟏𝟐

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𝟎.𝟏𝟏𝟖𝟖 𝟒(𝟏𝟐)
(𝟏+ ) −𝟏
𝟏𝟐
25. 𝑭 = 𝟔𝟎𝟎 ( 𝟎.𝟏𝟏𝟖𝟖 ) = 𝑷𝟑𝟔, 𝟔𝟒𝟏. 𝟑𝟐
𝟏𝟐

𝟏−(𝟏+𝟎.𝟏𝟐)−𝟔
26. 𝑷 = 𝟐𝟎𝟎𝟎 + 𝟐𝟎𝟎𝟎 ( ) = 𝑷𝟏𝟎, 𝟐𝟐𝟐. 𝟖𝟏 (𝟏𝒔𝒕 𝑪𝒉𝒐𝒊𝒄𝒆)
𝟎.𝟏𝟐
𝟏 − (𝟏 + 𝟎. 𝟏𝟐)−𝟓
𝑷 = 𝟑𝟓𝟎𝟎 + 𝟐𝟎𝟎𝟎 ( ) = 𝑷𝟏𝟎, 𝟕𝟎𝟗. 𝟓𝟓 (𝟐𝒏𝒅 𝑪𝒉𝒐𝒊𝒄𝒆)
𝟎. 𝟏𝟐
𝑫𝒊𝒇𝒇𝒆𝒓𝒆𝒏𝒄𝒆 = 𝑷𝟏𝟎, 𝟐𝟐𝟐. 𝟖𝟏 − 𝑷𝟏𝟎, 𝟕𝟎𝟗. 𝟓𝟓 = 𝑷𝟒𝟖𝟔. 𝟕𝟒
Choose 1st Choice

27. 𝑷 = 𝑷𝑨
𝟏 − (𝟏 + 𝟎. 𝟏𝟒)−𝟓
𝑨[ ] = 𝟓𝟎, 𝟎𝟎𝟎(𝟏 + 𝟎. 𝟏𝟒)−𝟏𝟎
𝟎. 𝟏𝟒
𝑨 = 𝟑𝟗𝟐𝟖. 𝟔𝟎

(𝟏+𝟎.𝟎𝟗)𝟖−𝟏
28. 𝑨 [ ] = 𝟐𝟎𝟎, 𝟎𝟎𝟎(𝟏 + 𝟎. 𝟎𝟗)𝟎 + 𝟏𝟎𝟎, 𝟎𝟎𝟎(𝟏 + 𝟎. 𝟎𝟗)𝟏 + 𝟓𝟎, 𝟎𝟎𝟎(𝟏 + 𝟎. 𝟎𝟗)𝟐
𝟎.𝟎𝟗
𝑨 = 𝟑𝟑, 𝟒𝟎𝟒. 𝟖𝟗

𝟎.𝟏𝟐 −𝟏𝟎
𝟏−(𝟏+ 𝟐 )
29. 𝑷 = 𝟏𝟎, 𝟎𝟎𝟎 + 𝟐𝟎, 𝟎𝟎𝟎 [ 𝟎.𝟏𝟐 ]
( )
𝟐

= 𝑷𝟐𝟒𝟕, 𝟐𝟎𝟏. 𝟕𝟒𝟏

𝟎.𝟏𝟐 −𝟔
30. 𝟐𝟒𝟕, 𝟐𝟎𝟏. 𝟕𝟒 = 𝟏𝟎𝟎, 𝟎𝟎𝟎 + 𝒙(𝟏 + )
𝟐
X= P208,807.43

31. i = 15% cmpd. Quarterly ; n=0

  0.15  10 
1  1   
  4  
 0.15 
  3
 4   0.15 
P60000 = P20000 + A 1  
 4 
A= P5439.18

32. At n = 22
P10000 1 0.14  = A  1  0.14 5  1
20
 
 0.14 

A = P20 791.64
𝟎.𝟏𝟐
𝟏−(𝟏+ 𝟐 )−𝟏𝟎 𝟎.𝟏𝟐 −𝟓
33. 𝑷 = 𝟏𝟎𝟎, 𝟎𝟎𝟎 + 𝟖, 𝟎𝟎𝟎 [ 𝟎.𝟏𝟐 ] (𝟏 + )
𝟐
𝟐
= 𝑷𝟏𝟒𝟑, 𝟗𝟗𝟗. 𝟎𝟖

34. P25, 000= A+A(1-(1+(.26/2))^-9)/(.26/2))

A = P4, 077.20

35. P30,000(1-(1+.15)^-6)/.15)+ P40,000(1-(1+.15)^-6)/.15)+ (P50, 000 /.15)*(1+.15)^-12

P= P241, 282. 32

𝟏−(𝟏+𝒊)−𝒏)
36. P=A[ ]
𝒊
.𝟎𝟖
𝟏−(𝟏+ 𝟒 )−𝟓𝟎(𝟒)
P=1000[ .𝟎𝟖 ]= ₱49, 047.35
𝟒

.𝟎𝟖
𝟏−(𝟏+ 𝟒 )−𝟏𝟎𝟎(𝟒)
37. P=1000[ .𝟎𝟖 ] = ₱49, 981.85
𝟒
𝑨
38. P=
𝒊
𝟏𝟎𝟎𝟎
P= .𝟎𝟖 = ₱50,000
𝟒

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39.
𝟏−(𝟏+𝟎.𝟏𝟓)−𝟔 𝟏−(𝟏+𝟎.𝟏𝟓)−𝟔 𝟓𝟎𝟎𝟎𝟎
P=30,000[ ] + 40,000[ ] (𝟏 + 𝟎. 𝟏𝟓)−𝟔 + (𝟏 + 𝟎. 𝟏𝟓)−𝟏𝟐
𝟎.𝟏𝟓 𝟎.𝟏𝟓 𝟎.𝟏𝟓
P= ₱241, 282.32

40. 𝐂𝐂 = 𝐅𝐂 + 𝐌/𝐢
𝟏𝟓𝟎, 𝟎𝟎𝟎
𝐂𝐂 = 𝟏, 𝟓𝟎𝟎, 𝟎𝟎𝟎 + = 𝐏𝟐, 𝟓𝟎𝟎. 𝟎𝟎
𝟎. 𝟏𝟓

𝟎.𝟏𝟓 𝟏𝟐
41. (𝟏 + ) = (𝟏 + 𝐢)
𝟏𝟐
𝐢 = 𝟎. 𝟏𝟔𝟎𝟖 ≈ 𝟏𝟔. 𝟎𝟖%

𝐌
42. 𝐂𝐂 = 𝐅𝐂 +
𝐢
𝟑𝟎𝟎𝟎
𝐂𝐂 = 𝟏, 𝟓𝟎𝟎, 𝟎𝟎𝟎 + = 𝐏𝟏, 𝟔𝟖𝟔, 𝟔𝟏𝟗. 𝟗𝟓
𝟎. 𝟏𝟔𝟎𝟖
𝟏𝟓𝟎,𝟎𝟎𝟎−𝟓,𝟎𝟎𝟎
43. 𝐂𝐂 = 𝟏𝟓𝟎, 𝟎𝟎𝟎 + = P218,855.86
(𝟏+𝟎.𝟏𝟐)𝟏𝟎 −𝟏

𝑷𝟒𝟓𝟎𝟎−𝟓𝟎𝟎
44. D = = P 400
𝟏𝟎

𝑷𝟏𝟐,𝟎𝟎𝟎−𝑷𝟖𝟎𝟎
45. D = = P 746.67
𝟏𝟓

46. P400 + P4200 = P4600

47. P746.67 + P 3500 = P4246.67

𝑷𝟒𝟔𝟎𝟎−𝑷 𝟒𝟐𝟒𝟔.𝟔𝟕
48. X 100 = 4.71%
𝑷𝟏𝟐,𝟎𝟎𝟎−𝑷4,𝟓𝟎𝟎

𝑿−𝑷𝟒,𝟓𝟎𝟎
49. Dep1 =
(𝟏+.𝟏𝟖)𝟔 −𝟏
(𝟎. 𝟏𝟖) = 0.1059X – P476.55

𝑷𝟒𝟐,𝟎𝟎𝟎−𝑷𝟔,𝟎𝟎𝟎
Dep2 =
(𝟏+.𝟏𝟖)𝟏𝟐 −𝟏
(𝟎. 𝟏𝟖) = P1,030.30

50. OC1 = P12,000

MRP1 = .18 x

TOTAL = DEP1+ OC1 + MRP1

TOTAL = 0.2859X + P11,523.45

OC2 = P7,200
MRP2 = .18(P42,000) = P7560

TOTAL = DEP2+ OC2 + MRP2

TOTAL = P15,790.60

.02859x + P11,523.45 = P15,790.60

X = P 14,925.32
12,000−9,000
51. 𝐶𝐶 = 12,000 + (1+0.09)7 −1
= 𝑷𝟏𝟓𝟔𝟐𝟑. 𝟎𝟏
30,000
52. 𝐶𝐶 = 300,000 + = 𝟑𝟐𝟒, 𝟔𝟎𝟒. 𝟏𝟕
(1+0.18)15 −1

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53. CC = FC + X + Y + Z
1−(1+0.12)−6
X = 100000[ ] = 411140.73
0.12
𝐴
Y = (1 + 0.12)−6
𝑖
120000
= (1 + 0.12)−6
0.12
= 506631.12
500000
Z =
((1+0.12)5 −1)−6
= 655873.88
CC = 5000000 + 411140.73 + 506631.12 + 655873.88
CC = 6 573 645.73
54. BRIDGE A:
1000 200,000 10,000
𝐶𝐶 = 200,000 + + +
0.08 (1 + 0.08)30 − 1 (1 + 0.08)5 − 1
= ₱255,875.64
55. BRIDGE B:

5,000 220,000
𝐶𝐶 = 240,000 + +
(1 + 0.08) (1 + 0.08)40 − 1

= ₱261,268.97

56. CHOOSE BRIDGE A, BECAUSE IT COSTS P 5393.33 LESSER THAN BRIDGE B

=₱255,875.64-₱261,268.97

=P 5393.33

57. D3 = ((Co – Cl)/L)(n) = ((90,000 – 8,000)/10)(3) = 24,600

58. C3 = 90,000 – 24,600 = 65,400
59. C10 = 410,000 – 17,500(10) = 235,000
60. C15 = 410,000 – 17,500(15) = 147,560
61. D = 0.1Co
L = 1 / 0.1 = 10 years
62.

63.

64.

65. Rate of depreciation = 1-√(CL/CO) = 1-√(2000/15000) = 18.25%

C8 = CO 〖 (1-K)〗^N = 15000〖(1-18.25%)〗^8
C8 = 2992.56
C8 = CO – D8
D8 = CO – C8
= 15000 – 2992.56
D8 = 12007.44

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66. K = 2/L = 2/10 = 0.2 OR 20%

C8 = CO 〖(1- 2/L )〗^N = 15000 〖(1- 2/10 )〗^8
= 2516.58
C8 = CO – D8
D8 = CO – C8
= 15000 – 2516.58
D8 = 12483.42

67. P=5000 [〖 1-(1+0.15)〗 ^(-4)/0.15]

P= P 14,279.89

68. Pg= 400/0.15[〖 1-(1+0.15)〗 ^(-4)/0.15-4/〖 (1+0.15)〗 ^4 ]

Pg= P 1,514.57
P=5000 [〖 1-(1+0.15)〗 ^(-4)/0.15]
P= P 14,279.89
PT=Pg+P
PT=1,514.57+14,279.89
PT=P15,789.47
15,789.47=AT [〖 1-(1+0.15)〗 ^(-4)/0.15]
AT=P5,530.5

69. F = A [(〖 (1+i)〗 ^n-1)/i] = A [(〖 (1+.12)〗 ^10-1)/.12]

= 12,284.11 pesos

70. W = ((1+r))/(1+i) (a multiplier), = 1.1/(1+.12) =55/56

when, (1 + r) = 550/500 = 1.1 (the percentage increase or decrease in the deposit)

P = C/(1+i) [(1- w^n)/(1- w)] = 500/(1+.12) [(1- 〖(55/56)〗^10)/(1- 55/56)] = 4122.11 pesos

When, C = is the first deposit

F = P (1 + i) n = 4122.11 pesos (1 + .12) 10

= 12, 802.65 pesos

71. 12, 802.65-12,284.11

=518.54

72. I = Pr = (200,000)(0.16/2) = 16,000

F = 200,000 = A ((1+0.12/2)^20-1)/(0.12/2)

A = 5436.91

TOTAL SEMIANNUAL EXPENSE = 16,000 + 5436.91

TOTAL SEMIANNUAL EXPENSE = 21436.91

73. I = Pr = (10,000)(0.12/2) = 600

P = 600 〖1-(1+0.12/2)〗^(-10*2)/(0.14/2)+10,000〖(1+0.14/2)〗^(-20)

P = 8940.6

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74. I = Pr = (1,000)(0.14/2) = 70

970 = 70 〖1-(1+0.16/2)〗^(-7*2)/(0.16/2)+C〖(1+0.16/2)〗^(-7*2)

C = P 1, 154.03

75. I = Pr = (1,000)(0.08) = 80

1,030 = 80 〖1-(1+i)〗^(-10)/i+1,000〖(1+i)〗^(-10)

i = 7.56%

76. Old method = 3200 x 25 = 80,000

New methos = 3200 x (25x0.7) = 56,000

Old – new = 24,000

275000 = 24(x)

X = 11.46 months

77. FOR M.C

1000000 x (0.12 x 1.2) = 144,000

FOR P.C

1000000 x (-0.02 x 0.4) = -8,000

Total = 136,000 units

78. (80)(130)=(x+80)(100) x=24 men

79. *With fine: P2, 205,000

((50) (190php/day) + (25)(220php/day) + (5)(300php/day)) (130)+ (30days)(2000php/day) = P2,205,000

*Without fine: P2, 121,000

((69)(190php/day)+(30)(220php/day) + (5)(300php/day))(100) = P2, 121,000

P2, 205,000> P2, 121,000

Savings with more men and with fine: P84, 000

80. 30,000 + (6000 holes x 35/hr x 1hr/30holes) = P37, 000

(6000holes x 30/hr x 1min/4holes) + 6000holes x 1.75/holes + 27500 = P38, 750

81. A=B

[X(35)/30] + 30,000 = [X(30)/4(60)] + X(1.75) + 27500

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X = 3530 HOLES

82. P=20/HR(1HR/200PCS)+2.5/PC

P= P2.60/PC

83. PA=PB

XA+2.5/PC(200PC/HR)=20/HR+2.5/PC(200PC/HR)+.60/PC(.02(200)PC/HR)

XA=P2240/HR

84. FOR ALUMINUM

P=8000UNITS(1HR/80UNITS)(10.80/HR)+640+8000UNITS(.03KG/UNIT)(8.7/KG)

P=P3808

85. FOR STEEL

P=8000UNITS(1HR/80UNITS)(P10.80/HR)+8000UNITS(0.110KG/UNIT)(P3.8/KG)

P=P4424

86. ANSWER IS ALUMINUM WILL BE MORE ECONOMICAL THAN STEEL

87. P4424- P3808

=P616

88. Capital=P270,000

Income=P185,400

OUTFLOW COSTS

Cost 1=annual depreciation cost=(P270,000-0.10(P270,000))/(((1+0.25)^5-1)/0.25)= P29,608.76

Cost 2=Taxes =0.04(P270,000)= P10,800

Cost 3=O.C.& M=0.04(P270,000)= P81,000

ROR=(P185,400- P29,608.76- P10,800- P81,000)/(P270,000)= 23.7%

23.7%<25%,This is not desirable investment

INVESTMENT−SALVAGE VALUE
89. 𝑃𝑂𝑃 =
NET ANNUAL INCOME

P270, 000 − P27, 000

=
P185, 400 − P91, 800

= 𝟐. 𝟔 𝒚𝒓𝒔

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90. OUTFLOW COSTS

Cost 1=annual depreciation cost

= (7,000,000-2,000,000)/ (((1+0.2)^5-1)/0.2)= 26,782.65
Cost 2=property tax =0.01(12,000,000) = 120,000
Cost 3=insurance =0.005(7,000,000) = 35,000
Cost 4=upkeep =500(25) = 12,500
TOTAL= P194 282.65

91. INFLOW COSTS

Cost 1=Rent =6,000(25)(0.9)(12\)= 1,620,000
Cost 2=annual appreciation cost
=(20,000,000-5,000,000)/(((1+0.2)^5-1)/0.2)= 80,347.96
TOTAL= P 1 700 347.96

92. ROR=(1,620,000+80,347.96- 26,782.65-120,000- 35,000-12,500 )/12,000,000×100%= 12.55%

93. OUTFLOW
300,000−50,000
Of1= (1+0.08)7 −1 = 28,018.1
0.08

Of2= 6,000

TOTAL=P 34 018.1

94. INFLOW

If1=10,000

If2=40,000

TOTAL= 50 000

𝑁𝐸𝑇 𝐴𝑁𝑁𝑈𝐴𝐿 𝑃𝑅𝑂𝐹𝐼𝑇

95. ROR=
𝐶𝐴𝑃𝐼𝑇𝐴𝐿
10,000+40,000−28,018.1−6,000
ROR=
300,000
ROR= 5.33% <8% NOT DESIRABLE

𝑁𝐸𝑇 𝐴𝑁𝑁𝑈𝐴𝐿 𝑃𝑅𝑂𝐹𝐼𝑇

96. ROR=
𝐶𝐴𝑃𝐼𝑇𝐴𝐿
10,000+40,000−28,018.1−6,000
ROR=
300,000
ROR= 5.33% <8% NOT DESIRABLE

97. OUTFLOW

Of1= (500,000-0)/( ((1+0.15)^5-1)/0.15)= 74157.78

Of2= (2)( 25/( hr) x 8hrs/( day) x 6days/( week) x 50week/( yr))=120,000

Of3= (8500)(12)= 102,000

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Of4=(2weeks)( 25/( hr) x 6days/( week) x 8hrs/( day))(2)=4,800

Of5=25,000(12)=300,000

TOTAL=600 957.78

98. INFLOW
25 12𝑐𝑎𝑟𝑠 8ℎ𝑟𝑠 6𝑑𝑎𝑦𝑠 50𝑤𝑒𝑒𝑘𝑠
If1=( 𝑥 𝑥 𝑥 𝑥 )=720,000
𝑐𝑎𝑟 ℎ𝑟 𝑑𝑎𝑦 𝑤𝑒𝑒𝑘 𝑦𝑟

𝑁𝐸𝑇 𝐴𝑁𝑁𝑈𝐴𝐿 𝑃𝑅𝑂𝐹𝐼𝑇

99. ROR=
𝐶𝐴𝑃𝐼𝑇𝐴𝐿
720,000−74157.78−120,000−102,000−4800
ROR=
500,000
ROR= 23.81%>20% RECOMMEND

100. POP=500,000/( 720,000-120,000-102,000-4800)

POP= 2.59yrs

ENGINEERING ECONOMY