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2.1)
iPN
(0.09)($3,000)(5)
$1,350
2.2)
Simple interest:
F
P (1 iN )
Compound interest:
Compound interest:
P (1 i) N
$10,000 (1.07)20 1
$28,696.84
2.4)
Compound interest:
F
Simple interest:
F
2
2.5)
Loan balance calculation:
Principal
Payment
$0.00
$835.46
$910.65
$992.61
$1,081.94
$1,179.32
End of period
0
1
2
3
4
5
2.6)
2.7)
$20,000( F / P,10%,2)
$8, 000(0.6806)
$20,000(1.21)
Interest
Payment
$0.00
$450.00
$374.81
$292.85
$203.52
$106.14
Remaining
Balance
$5,000.00
$4,164.54
$3,253.89
$2,261.28
$1,179.33
$0.00
$5, 444.8
$24,200
2.8)
Alternative 1
$100
Alternative 2
P
$120( P / F ,8%,2)
$120(0.8573)
$102.88
Alternative 2 is preferred
2.9)
(a)
$7,000( F / P,9%,8)
(b)
$1,250( F / P,4%,12)
$1,250(1.6010)
$2,001.25
(c)
$5,000( F / P,7%,31)
$5,000(8.1451)
$40,725.5
(d)
$20,000( F / P,6%,7)
$20,000(1.5036)
2.10) (a)
$4,500( P / F ,7%,6)
(b)
$6,000( P / F ,8%,15)
$6,000(0.3152)
(c)
$20,000( P / F ,9%,5)
$20,000(0.6499)
(d)
$12,000( P / F ,10%,8)
$7,000(1.9926)
$4,500(0.6663)
$13,948.2
$30,072
$2,998.35
$12,000(0.4665)
$1,891.2
$12,998
$5,598
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
2
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
3
2.11) (a)
$6,000( P / F ,8%,5)
(b)
$15,000( F / P,8%,4)
$6,000(0.6806)
$4,083.6
$15,000(1.3605)
$20,407.5
2.12)
F 3P P(1 0.07) N
log 3 N log 1.07
N 16.24 years (or 17 years)
2.13)
2 P P(1 0.12) N
log 2 N log 1.12
N 6.12 years
F
Rule of 72:
72 /12
6 years
2.14)
P
2.15)
Simple interest:
I
iPN
(0.1)($1, 000)(3)
$300
Compound interest:
I
P (1 i) N
$1,000 (1 .095)3 1
$312.93
$3,000
1.06 2
$3,500
1.063
$4,000
1.064
$6,000
1.065
$13,260.58
2.17)
$2, 000( F / P,8%, 6)
$8,109.05
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
3
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
2.18)
P
2.19)
P
2.20)
Method 1:
F
Method 2:
$6,451.50
$11, 451.50
2.21)
$150, 000 $20, 000( P / A,9%,5) $10, 000( P / F ,9%,3) X ( P / F ,9%, 6)
X
$134, 046.98
2.22)
$10,000(1.08)5
$80,000
$43,029.99
$12,000(1.08)3
X (1.08)2
2.23)
100(1.08)4
X $93.67
This is the minimum selling price. So if John can sell the stock for a higher price
than $93.67, his return on investment will be higher than 8%.
2.24) (a)
(b)
F
F
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
4
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
2.25) (a)
(b)
(c)
(d)
F
F
F
F
2.26) (a)
(b)
(c)
(d)
2.27)
$35, 000 $3, 000( F / A, 6%, N )
( F / A, 6%, N ) 11.6666
N
1 0.06
1
11.6666
0.06
N log(1.06) log(1.7)
N
9.11 years
2.28)
$10,000
A( F / A,7%,5)
A $1,738.92
2.29)
$500(1.1)10
$1,000(1.1)4
$1,000(1.1)8
$1,000(1.1)2
$1,000(1.1)6
$1,000
$8,886.12
2.30) (a)
(b)
(c)
(d)
2.31)
Equal annual payment amount:
A
$20,000( A / P,10%,3)
$20,000(0.4021)
$8,042
End of period
0
1
2
3
Principal
Payment
$0.00
$6,042.00
$6,646.20
$7,310.82
Interest
Payment
$0.00
$2,000.00
$1,395.80
$731.18
Remaining
Balance
$20,000.00
$13,958.00
$7,311.80
$0
2.32) (a)
(b)
(c)
(d)
2.33) (a)
2.34)
P
P
P
P
( A / P,6.25%,36)
0.0625 1 0.0625
1 0.0625
1 0.0925
(b)
( P / A,9.25%,125)
$400( F / A,9%,15)(1.09)
F1
36
36
0.07044
125
0.0925 1 0.0925
125
10.81064
$400(29.3609)(1.09)
$12,801.35
2.35)
F2
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
6
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
7
2.37)
P
2.38)
A $15,000 $3,000( A / G,9%,10)
$15,000 $3,000(3.7978)
$3,606.6
2.39)
$250( P / G , 9%, 8)
$250(16.8877)
2.40)
C(P / G,12%,6) $800(F / A,12%,4)
[$1,000 $200( P / G,12%,4)](F / P,12%,4)
C(8.9302) $800(4.7793)
[$1,000 $200(4.1273)](1.5735)
C
$458.90
2.41) (a)
1 0.1
0.12
1 0.12
0.1
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
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in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
N
1
2
3
4
5
An
$3,000,000
$2,835,000
$2,679,075
$2,531,726
$2,392,481
$2,260,894
$2,136,545
6
7
1 0.055 1 0.12
0.12
0.055
$11,923,948.35
1 0.055 1 0.12
0.12
0.055
$7,134,825.54
2.42)
20
An (1 i)
n 1
20
(2,000,000)n(1.06) n 1 (1.06)
n 1
20
(2,000,000 / 1.06)
n(
n 1
1.06 n
)
1.06
20
(2,000,000 / 1.06)
n
n 1
(2,000,000 / 1.06)
20(21)
2
$396,226,415.1
9
Period
11
Withdrawal
$3,000
12
13
$3,000(1.06)
$3,000(1.06) 2
14
$3, 000(1.06)3
15
$3, 000(1.06) 4
Equivalent worth of the withdrawal series at period 10, using i = 8%:
$3,000(P / A1 ,6%,8%,5)
$3,000
1 0.06
0.08
1 0.08
0.06
$13,383.92
$13,384
A( F / A,8%,10)
14.4866 A
A $923.88
(b) Equivalent present worth of the withdrawal series at 6%
P
5
1 0.06
$14,150.94
10
2.46)
$472.46
2.47)
Computing the equivalent worth at period 3 will require only two different
types of interest factors.
V1,3
V2,3
$605.466
A(P / A,10%,2)(F / P,10%,3)
A(1.7355)(1.3310)
A( P / A,10%,2)
A(1.7355)
4.04545A
A $605.466 / 4.04545
$149.67
2.48)
P1,1
P2,1
X ( P / A,10%, 4)
X X (3.1699)
4.1699 X
P1,1
P2,1
$460.43 4.1699 X
X $110.42
2.49)
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
10
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
11
P1
P2
$50(3.1699) $35(1.7355)(0.8264)
208.6926
C ( P / A,10%, 4) C ( P / A,10%, 2)( P / F ,10%,1)
C (3.1699) C (1.7355)(0.9091)
4.7476C
P1
P2
$43.96
2.50)
$797.52
2.52)
An
$0
$800
$820
$840
$860
$880
$900
$920
$300
$300
$300 - $500
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
11
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
12
6.075C
C
$4,746.20
$781.27
2.53)
200(1.06)(1.08)(1.12)(1.15)
X (1.08)(1.12)(1.15)
$300(1.15)
$1000
247.9 1.39104 X 345 1000
1.39104 X 360.1
X
$258.87
2.55)
2.56)
P1,0
P2,0
X ( P / F ,10%,1) ( P / F ,10%, 4)
X (0.9091) (0.6830)
1.5921X
$1,504.55
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
12
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
13
2.57)
P1,2
X (P / F,8%,3)
X (0.7938)
P2,2
800(P / A,8%,10)
800(6.7101)
5368.08
6,762.51
2.58)
C ( P / A,9%,5)( P / F ,9%,1) $4, 000
C (3.8897)(0.9174) $4, 000
C $1,120.95
2.59)
P (1.05)(1.08)(1.1)(1.06)
$1, 000(1.08)(1.1)(1.06) $1,500(1.1)(1.06)
$1, 000(1.06) $1000
P (1.322244) $5, 068.28
P $3,833.09
2.60)
Exact:
2 P P (1 i )5
2 (1 i )5
log 2 5 log(1 i )
i 14.87%
Rule of 72:
72 / i
5years
i =14.4%
2.61)
P1
(1 i )5 1
i (1 i )5
$50 (1 i )
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
13
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
14
P2
P1
$200 $150
$50
$200
$50
2
3
4
(1 i ) (1 i ) (1 i ) (1 i ) (1 i )5
P2 and solving i with Excel Goal Seek function,
i 14.96%
2.62)
$35,000 $10, 000( F / P, i,5)
i
$10, 000(1 i )5
28.47%
2.63) The equivalent future worth of the prize payment series at the end of
Year 20 (or beginning of Year 21) is
F1
$1,952,381(F / A,6%,20)
$1,952,381(36.7856)
$71,819,506.51
F1
$109,514,828.9 $71,819,506.51
$37,695,322.4
2.64)
$1,000(F / P,9.4%,5) $500( F / A,9.4%,5)
(1 0.094)5 1
)
0.094
$1,000(1.5671) $500(6.0326)
$1,000((1 0.094)5 ) $500(
$4,583.4
$4,583.4( F / P,9.4%,60)
$4,583.4((1 0.094)60 )
$4,583.4(219.3)
$1,005,141.21
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
14
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
15
PContract
Instructor Solutions Manual to accompany Fundamentals of Engineering Economics, Second Edition, by Chan S. Park.
ISBN-13: 9780132209618. 2008 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction, storage
15
in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.