Department of Electrical and Computer Engineering

Tennessee State University

CISE 5040 SYSTEMS ENGINEERING Home Work Fall 2013 (10/1/2013)
For each problem, circle the answer(s) from the four choices (A), (B), (C) or (D).
Prob. 1. Approximately how many years will it take to double an investment at a 6 % effective annual
rate?
(A) 10 yrs ; (B) 12 yrs ; (C) 15 Yrs ; (D) 17 yrs.
Prob. 2. An individual contributes $200 per month to a 401(k) retirement account. The account earns
interest at a nominal annual interest rate of 8%, with the interest being credited monthly. What
is the value of the account after 35 years?
(A) $368,000; (B) $414,000; (C) $447,000; (D) $459, 000.
Prob. 3. A graduating high school student decides to take year off and work to save money for college.
The student plans to invest all money yearned in a savings account earning 6% interest,
compounded quarterly. The student hopes to have $5,000 by the time school starts in 12
months. How much money will the student have to save each month?
(A) $396/mo; (B$405/mo; (C) $407/mo; (D) $411/mo.
Prob. 4. A gold mine is projected to produce $20, 000 during its first year of operation. $19,000 the
second year, $18,000 the third year, and so on. If the mine is operated for a total of 10 years,
and the effective annual interest rate is 6%, what is its present worth?
(A) $118,000; (B) (C) ; (D) $177,000.
Prob. 5. $5,000 is put into an empty savings account with a nominal interest rate of 5%. No other
contributions are made to this account. With monthly compounding , how much interest will
have been earned after five years?
(A) ; (B) ; (C) $1,410 ; (D) $1,420.
Prob. 6. A machine costs $10,000 and can be depreciated over a period of four years, after which its
salvage value will be $2,000. What is the straight-line depreciation in year 3
(A) $2,000 ; (B) $2,500 ; (C) $4,000; (D) $6,000
Prob. 7. A ground water treatment system is needed to remediate a solvent-contaminated aquifer. The
system costs $2,500,000. It is expected to operate a total of $130,000 hours over a period of
10 years and then have a $250,000 salvage value. During its first year in service, it is operated
for 6500 hours. What is its depreciation in the first year using the MACRS method?
(A) $113,000; (B) $125,000 ; (C) ; (D) $250,000
Prob. 8. The construction of a volleyball court for the employee of a highly successful mid-sized
publishing company in California is expected to cost $1,200 and have annual maintenance
cost of $300. At an effective annual interest rate of %5, what is the projects capitalized cost?
(A) ; (B) ; (C) ; (D) $18,000
Prob. 9. A warehouse building was purchased 10 years ago for $250,000. Since then, the effective
annual interest rate has been *%, inflation has been steady at 2.5%, and the building has had
no deterioration or decrease in utility. What should be warehouse sell for today?
(A) $427,000; (B) $540,000; (C) $678,000 ; (D) $691,000.
Prob. 10. A delivery company is expanding its fleet by five vans at a total cost of $75,000. Operating
and maintenance cost for the new vehicles are projected to be $20,000/year for the next eight
years. After eight years, the vans will be sold for a total of $40,000 with the expanded fleet.
What is the companys rate of return on the purchase?
(A) 19.7% ; (B) 20.8% ; (C) 21.7%; (D) 23.2%
Prob. 11. If a credit union pays 4.125% interest compounded quarterly, what is the effective annual
interest rate?
(A) 4.189%; (B) 8.25%; (C) 12.89%; (D) 17.55%
Prob. 12. The president of a growing engineering firm wishes to give each of 50 employees a holiday
bonus. How much is needed to invest, monthly for a year at 12% nominal interest rate,
compounded monthly so that each employee will receive a $1,000 bonus?
(A) $2,070; (B) $3,840; (C) $3, 940; (D) $4,170.
Prob. 13. If the interest rate on an account is 11.5% compounded yearly, approximately how many
years will it take to triple the amount?
(A) 8 years; (B) 9 years; (C) 10 years; (D) 11 years
Prob. 14. Fifteen years ago $1000 was deposited in a bank account, and today it is worth $2370. The
bank pays interest semi-annually. What was the nominal annual interest rate paid on this
account?
(A) 2.9% ; (B) 4.4% ; (C) 5.0% ; (D) 5.8%
Prob. 15. A company puts $25,000 down and will pay $5000 every year for the life of a machine (10
years). If the salvage value is zero and the interest rate is 10% compounded annually, what is
the present value of the machine?
(A) ; (B) ; (C) $75,500 ; (D)
Prob. 16. The maintenance cost for a car this year is expected to be $500. The cost will increase $50
each year for the subsequent 9 years. The interest is 8% compounded annually. What is the
approximate present worth of maintenance for the car over the full 10 years?
(A) $4,300 ; (B) $4,700 ; (C) $5,300 ; (D) $5,500.
Prob. 17. A deposit of $1000 is made in a bank account that pays 8% interest compounded annually.
Approximately how much money will be in the account after 10 years?
(A) ; (B) $2,000; (C) ; (D)
Prob. 18. At what rate of annual interest will an investment quadruple itself in 12 years?
(A) ; (B) ; (C) ; (D)