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Worksheets01 ECD W04
Total questions: 18
Worksheet time: 10mins
Engineering Economic Analysis is most suitable for .....
Simple problems
Intermediate problems
Complex problems
All types of problems
An example of an intermediate problem.
Should I marry A or B?
Should I invest in a 7 Nano chip making plant in Singapore?
Should I lease or buy a new motorbike?
Should I pay my lunch by PAYNOW or cash?
Youi are given the choice in taking a loan. Which one will you choose?
Simple interest rate of 3%
Compound interest rate of 3%
Effective interest rate of 3%
If the interest rate is 5% compounded annually, the effective interest rate will be ..... than 5%.
equal to
less than
more than
You need to take a loan from the bank. The bank offers 3 different options. Which one is likely to be unfavourable to you?
Simple interest, pay all at the end
Compound interest, pay all at the end
Simple interest paid annually, principal repaid at the end
The best investment plan amongst alternatives look for .....
lowest capital outlay
highest salvage value
minimal negative cash outflow
highest net present worth
This is the standard assumption for this module.
start-of-period cash flow
mid-of-period cash flow
end-of-period cash flow
This formula wil calculate how long does it take for a certain amount to double in magnitude if the interest is 3% compounded annually.
2 = 1 * (P/F, 3%, N)
4 = 2 * (F/P, 3%, N)
4 = 2 * (P/F, 3%, N)
2 = 1 * (F/P, 3%, N)
An annual cash flow of 10 years .....
begins at start of period 1
begins at end of period 1
has 9 equal cash flows
has 10 equal cash flows
The correct Interest Factor Notation formula to find the future value for $100, interest of 5%, N of 8 years:
F = 100 * (1+5%)^8
F = 100 * (F/P, 5%, 8)
F = 100 * (F/P, 8%, 5)
When the projected cash flow increase or decrease by a uniform amount each time period, this is a_____
Uniform Series Cash Flow
Uniform Gradient Series Cash Flow
Multiple Single Cash Flow
A Uniform Gradient Series (G) can be positive or negative
True
False
It depends
Uniform Series and Uniform Gradient Cash Flow can be broken down into multiple Simple Payment Cash Flow
True
False
Sometimes
Any uniform gradient cash flow can be converted to a combination of a simple cash flow and a uniform cash flow.
True
False
Uniform Gradient and Uniform Series cash flows
They must be used whenever applicable
They should be used whenever applicable
Both series appear in all projects cash flow
Both series can be broken down into multiple simple cash flow
Examples of correct Interest Factor Notation
F = P * (F/P, i%, N)
F = P * (P/F, i%, N)
F = P (1 + i)^N
F = FV (i%, N, 0, -PV, 0)
The Interest Factor Notation to compute the Present Value of a Uniform Series, A, is given by
P = A * (A/P, i%, N)
P = G * (P/G, i%, N)
P = A * (P/A, i%, N)
A cash flow diagram has to be scaled: the length of the cash flows must be proportional to the $ value
True
False
