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SEPTEMBER 2013
EBMC 3103
ENGINEERING ECONOMICS
NO. MATRIKULASI
810128016402002
810128-01-6402
NO. TELEFON
07-7716368
E-MEL
fmei2801@yahoo.com.my
PUSAT PEMBELAJARAN
QUESTION 1
(a)
The idea that money available at the present time is worth more than the same amount in
the future due to its potential earning capacity. This core principle of finance holds that provided
money can earn interest, any amount of money is worth more the sooner it is received.Also
referred to as Present Discounted Value. Everyone knows that money deposited in a savings
account will earn interest. Because of this universal fact, we would prefer to receive money today
rather than the same amount in the future.
For example, assuming a 5% interest rate, $100 invested today will be worth $105 in one year
($100 multiplied by 1.05). Conversely, $100 received one year from now is only worth $95.24
today ($100divided by 1.05), assuming s 5% interest rate.
(b)
P = 400
n= 5 YEARS
i= 10%
F=?
i= 10%
RM400
RM400
RM400
RM400
F=?
RM400
(c)
A Nominal Interest Rate, r, can be defined as an interest Rate that does not include any
consideration of compounding Nominal means, in name only, not the real rate in this case.
Nominal interest rate is rate which includes inflation.
Mathematically, we have the following definition:
QUESTION 2
(a)
A measure of the decrease in value of an asset over a specific period of time in the certain asset
life. This usually pertains to property such as asset, real estate, vehicle and etc. that can lose value
due to indirect causes such as a decline in the quality or other external factors. It could be no
market value after a certain life period. Or Our text book explain: It is the anticipated period of
time in which the investment depreciates from the present cost to a salvage value or resale value.
(b) (i)
i = 10%
RM22000
RM22000
RM2200
RM1516.31
(b) (ii)
Calculating the initial investment
Calculating the present value
Justified amount to purchase equipment $83,397.31
RM22000
RM22000
QUESTION 3
(a)
Calculate the effective rate per semi-annual period.
Calculating effective rate:
r = (1+i/n)^n - 1
= (1 + 0.24/2)^2 - 1
= 25.44%
(b)
SemiAnnualcompunding
r=(1+i/n)^n1
=(1+0.20/2)^21
=21.00%
AnnualCompounding
r=(1+i/n)^n1
=(1+0.20/1)^11
=20.00%
QUESTION 4
(i)
(ii)
G = - ((105-47500)/7) = - 7500 m.u.
A' = 105
n=8 & i=10%
F=F'+F*= A'(F/A, 10, 8) + G(F/G, 10, 8)
=105((1.18-1)/0.1) 7500/0.1(((1.18-1)/0.1)-8)
= 885897.2