Question

What textbook or source are these question from? I cant seem to find them anywhere online. It should be an engineering economics textbook, but I am not sure of the edition. No answers required. I would just like to know the source. It would really help me out. Thanks!

EX 1. What is the approximate future value compounded monthly, of a current investment of $28,000 at an annual interest rate of 3.5% for the next 20 years? A. $558, 380.8 B. $958, 716.8 C. None of these D. $56, 327.67

EX 2. A company makes an investment in a new product costing $574,000 and is expected to have service life of 10 years. If it is expected to generate the following profits: 1- 175K 2- $185K 3-$125K 4- $125K , 5- $140K, 6-$220K , 7-10 - $150K. and the project is evaluated at a rate of 4%. What is the present value of the project ? What is the annual equivalent ?

Ex.3 When calculating conventional payback period you must use discounting to calculate the payback period in a straight-line method, ignoring the time value of money? T/F

Ex. 4 Projects are usually either service or revenue related? A) True B) False

Answer 1

Excercise 1

Amount invested = $28,000

Interest rate = 3.5% compounded monthly

Since, interest is compounded monthly, interest rate has to be divided by 12

Adjusted interest rate = 3.5/12 = 0.0029167

Time period = 20 years

Since, interest is compounded monthly, time period has to be multiplied by 12.

Adjusted time period = 12 * 20 = 240

Calculate the Future Value -

FV = $28,000 (1+0.0029167)²⁴⁰

FV = $28,000 (1.0029167)²⁴⁰

FV = $28,000 * 2.0117

FV = $56,327.67

The approximate future value is $56,327.67

Hence, the correct answer is the option (D).