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EGN 3613 Exam #1 Page 2 of 3 Enginee

IMPORTANT! Show all your work where appropriate. No credit can be given if you don’t show your logic/calculations.

2 Points

$1000.00 Now is equivalent to how much 1 Year Ago at 9%?

$991.00 b) $917.43 c) $1000.00 d) None of the above

2 Points

$20,000.00 borrowed today for 2 years at 5% Compound Interest will result in how much total interest at the end of Year 2?

$2000.00 b) $2050.00 c) $20,000.00 d) $22,000.00

2 Points

Each Define each of the following symbols (explain in enough detail to show you understand)

F – Future Value

P – Present Value

A – Annunity or Annual Value

G – Arithmetic Gradient

2 Points

Is the MARR?

Equal to the rate of return from a “Safe” investment

A rate that must be exceeded to satisfy internal company project investment policies

Equal to the weighted average cost of capital (WACC)

Greater than 20%

2 Points

The arrows on a Cash Flow Diagram need to be drawn to scale?

True

False

9 Points

If I invested $5000 in your company, with the requirement that I receive $10,000 in 7 years, what interest rate would I need to earn?

IMPORTANT! Show all your work where appropriate. No credit can be given if you don’t show your logic/calculations.

75 Points

Draw and solve the Cash Flow Diagram for Future Value “F”. This is a 10 year Cash Flow, and interest rate is a compounded 7%).

$5000.00 is Invested Today for a piece of testing equipment

$2000.00 is Earned as Annual Income from end of years 2-6 through use of this test equipment

$400.00 is the Annual Maintenance Cost of the testing equipment for all 10 years

Salvage Value at the end of the 10th year is $1500.00

There is an Arithmetic Gradient Income from years 6-10 with a Base Annuity of $500.00 and an Annual Gradient G of +$50.00

What is the Future Value “F” of this Engineering Cash Flow Investment?

EGN 3613 Exam

IMPORTANT! Show all your work where appropriate. No credit can be…