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3ma M3 Assign

The document contains lessons and problems about engineering economic topics such as depreciation, capital financing, break-even analysis, and economic comparisons. Several word problems are provided with the necessary data to calculate answers related to these engineering economic principles.

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56 views

3ma M3 Assign

The document contains lessons and problems about engineering economic topics such as depreciation, capital financing, break-even analysis, and economic comparisons. Several word problems are provided with the necessary data to calculate answers related to these engineering economic principles.

Uploaded by

zyx xyz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SCORE

NAME: ____________________________________________________ May 6, 2024


DATE: ___________________________
3MA
COURSE AND SECTION: _________________ MEES 108 – Eng’g Econ
SUBJECT: ________________________________________

SEAT NUMBER: ________________________ ASSIGNMENT - FINALS


ACTIVITY: ________________________________________

LESSON 1: DEPRECIATION
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 value or scrap value. Determine the
length of service life necessary if the depreciation method used is (a) SLM (b) SFM, i=8% and SYDM.
Answers: a) 10 years, b) 7.64 years, c) 19 years
A contractor imported a bulldozer for his job, paying P250,000 to the manufacturer. Freight and insurance
charges amounted to P18,000; customs' broker's fees and arrastre services, P8,500; taxes, permits, and other
expenses, P25,000. If the contractor estimates the life of the bulldozer to be 10 years with a salvage value of
P20,000, determine the book value at the end of 6 years, using (a) SLM, (b) SFM at 8%, (c) DBM, (d) DDBM (e)
SYD.
Answers: a) P132,600; b) P158,949.69; c) P59,201.53; d) P79,036.42; e) P71,181.82
A civil engineer bought a gantry crane for erecting tall buildings. It was invoiced from Japan CIF (cost,
insurance, freight) Manila at P250,000. Brokerage, Bank, arrastre fees, customs' duties, permits, etc. total
P120,000. At the end of 10 years, he expects to sell it for P50,000. Prepare a depreciation schedule for each
of the following methods (a) SLM, (b) SFM at 12%, (c) DBM, (d) SYDM, and (e) DDBM.
A lathe machine costs P300,000 with a salvage value of P15,000 is expected to last for P28,500 hours in period
for 5 years. In the first year of service, it was used for 8,000 hours. Compute the depreciation for the first
year and the book value at the end of the first year.
Answer: P80,000 & P220,000
LESSON 3: CAPITAL FINANCING
A Corporation sold an issue of 20-year bonds, having a total face value of 10,000,000 for 9,500,000. The bonds
bear interest at 16%, payable semiannually. The company wishes to establish a sinking fund for retiring the
bond issue and will make semiannual deposit that will earn 12%, compounded semiannually. Compute the
annual cost for interest and redemption of these bonds.
Answer: P1,730,000.00
A company has issued 10-year bonds. with face value of 1,000,000 in 1,000 units. Interest at 16% is aid
quarterly. If an investor desires to earn 20% nominal interest on 100,000 worth of these bonds, what would
the selling rice have to be?
Answer: P82,840.91
A 1,500-bond which will mature in 10 years and with a bond rate of 15% payable annually is to be redeemed
at par at the end of this period. If it is sold now for 1,390. determine the yield at this price.

Answer: 16.55%
LESSON 4: BREAK-EVEN ANALYSIS
A company is considering two alternatives with regards to equipment which it needs. The alternatives are as
follows:

Alternative A:
Purchase
Cost of Equipment 700,000
Salvage Value 100,000
Daily operating cost 500
Economic life, years 10

Alternative B:
Rental at 1,500 per day.
At 18% interest, how many days per year must the equipment be in use if Alternative A is to be
chosen.

Answer: 152 days


A small shop in Bulacan fabricates portable threshers for palay producers in the locality. The shop can produce
each thresher at labor cost of P1800. The cost of materials for each unit is P2.500. The variable costs amount
to P650 per unit, while fixed charges incurred per annum totals P69,000. If the portable threshers are sold at
P7, 800 per unit, how many units must be produced and sold per annum to break-even?
Answer: 25 units
Compute for the number of blocks that an ice plant must be able to sell per month to breakeven based on the
following data:

Cost of electricity per block P20


Tax to be aid per block P2
Real estate tax P3,500/month
Salaries and wages P25,000/month
Others P12,000/month
Selling rice of ice P55/block

Answer: 1,228 blocks


Data for two 50-h motors are as follows:
Alpha Motor Beta Motor
Original Cost 37,500 48,000
Annual Maintenance 1,500 750
Life, years 10 10
Efficiency 87% 87%
Taxes and Insurance 3% 3%

Power cost is 2.00 per kWh. If money is worth 20%, how many hours per year would the motors have to be
operated at full load for them to be equally economical? If the expected number of hours of operation per
year exceeds the break-even point, which motor is more economical?
Answer: 444 hours
If the expected number of hours of operation per year exceeds the break-even point, Beta Motor is more
economical since it has a lower fix cost.

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