EGN3613 Module 4 Example Calculations
Engineering Economics Calculations
Present worth of annual series, future worth of annual series, linear gradient series
Problems Solved:
Q1) Calculate the present worth value of 9 annual payments of $800 made at the end of each year knowing that the interest rate is 8%. See the diagram below:
$800 $800 $800 $800 $800 $800 $800 $800 $800
1 2 3 4 5 6 7 8 9
Q2) A hospital bought digital imaging equipment annual payments of $243,000 per year over 8 years. If the interest rate is 13%, what will be the total amount paid for the equipment at the end of the eighth year?
?
$243K $243K $243K $243K $243K $243K $243K $243K
0 1 2 3 4 5 6 7 8
Q3) The Highway Department expects the cost of maintenance for a piece of heavy construction equipment to be $5,000 in year 1, then increase to be $5,500 in year 2, and to increase annually by $500 through year 10. At interest rate of 10% per year determine the present worth of 10 years of maintenance costs.
Q4) Ryan Borrowed $15,000 now with a 7% interest rate compounded annually. He needs to pay them back over 7 years starting from the end of the first year, what will be Ryan’s annuity assuming that he will miss the 4th payment?
Q5) Engineering company just purchased a new CAD software for $8,000 now and annual payments of $500 per year for 6 years starting 2 years from now for annual upgrades. What is the present worth of the payments if the interest rate is 6% per year?