COLLEGE OF ENGINEERING & TECHNOLOGY
Department: Basic and Applied Sciences Department
Engineering Economy NE 364
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Sheet 4
Principles of money-time related
-Equal annual payment series:
1- How much money can be withdrawn at the end of five years from your saving
account if you make an annual contribution of $5000 to your savings account at the
end of each year for five years? Assume that your savings account earns an interest
rate of 8% annually.
2- A future amount of $150000 is to be accumulated through annual payments, A,
over 20 years. The last payment of A occurs simultaneously with the future amount
at the end of year 20. If the interest rate is 9% per year, what is the value of A ?
3- What equal annual payment series is required in order to repay a present amount
of $25000 in eight years at 10% interest compounded annually ?
4- Determine the (P, F, A) equivalent value of the given cash-flow at 10% interest
rate.
COLLEGE OF ENGINEERING & TECHNOLOGY
Department: Basic and Applied Sciences Department
Engineering Economy NE 364
-------------------------------------------------------------------------------------------------------------------------------
5- Determine the (P, F, A) equivalent value of the given cash-flow at 10% interest
rate.
6- Determine the value of (Z), so that the two cash-flow are equivalent at 10%
interest rate.
7-Annie White graduated from college with a student loan debt of $32,000. The
interest rate on this debt is 0.5% per month. If monthly payments on this loan are
$618.65, how many months would it take for Annie to repay the entire loan?
8- Mr. Smith has saved $1200 each year for 25 years. A year after the saving
period ended, he withdrew $4500 each year for a period of 5 years. In the 6thand
7thyears, he only withdrew $3000 per year. In the 8thyear, he decided to withdraw
the remaining money in his account. If the interest rate was 5% per year, what was
the amount he withdrew at the end of the 8thyear?
COLLEGE OF ENGINEERING & TECHNOLOGY
Department: Basic and Applied Sciences Department
Engineering Economy NE 364
-------------------------------------------------------------------------------------------------------------------------------
9- Lisa plans to retire on her 65thbirthday. On her 30thbirthday, Lisa will start
saving $A per year for 35 years. Starting on her 65thbirthday, Lisa plans on
withdrawing $15,000 and will continue these annual withdrawals until the account
is exhausted on her 80thbirthday. If Lisa’s bank account pays up to 5% per year,
what annual amount of $A will Lisa need to invest to achieve her retirement goal?
10- Maintenance expenses for a bridge on a local river are estimated to be $30,000
per year for the first 10 years, followed by two separate $80,000 expenditures in
years 15 and 20. The expected life of the bridge is 30 years. If the interest is 7%
per year, what is the equivalent uniform annual expense over the entire 30-year
period?
