Solutions Manual for Contemporary Engineering Economics 7th EDITION By CHAN PARK ( All Chapters, 100% Original, Verified A+ Grade)

SOLUTIONS MANUALcv




For


Contemporary Engineering Economics
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SEVENTH EDITION
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CHAN PARK
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,Chapter 1 Engineering Economic Decisions
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1.1
 Lease
o Deposit (typically one month worth of deposit) refundable when
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expires.
o Monthly lease payment cv cv
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o Monthly maintenance fees
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Monthly utility expenses
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o
 Buy Closing fees cv

o Down payment cv cv
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o Monthly mortgage payments cv cv

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Property taxes
o
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Monthly utility fees
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o Monthly maintenance fees
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o Repair expenses cv cv


Homeowners’ association fee (if applicable)
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o
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o
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o
1.2

 Option 1: cv




o Total amount at the end of two years: $1,150
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 Option 2: cv


o Loan $500 to a friend for one year and receive $600
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o Deposit $500 (left over) in a back at 3% for two years:
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$500(1.03)(1.03) = $530.45 cv cv




o Deposit $600 received from your friend at 3% per year for a year:
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$600(1.03) = $618 cv cv


Total amount at the end of two years:
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$530.45 + $618 = $1,148.45 cv cv cv cv


These two options are about the same. But considering the trustworthiness,
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you could go with Option 2.
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,Chapter 2 Accounting Information for Engineering
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Economic Decisions
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2.1
(2) Income statement; (1) balance sheet; (3) cash flow statement; (4)
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operating activities; (5) investing activities, and (6) financing activities; (7)
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capital account (paid-in capital)
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2.2
(7), (8), (1), (11), (3), (9)
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2.3
(a)

 Current assets = $150,000 + $200,000 + $150,000 + $50,000 + $30,000
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= $580,000 cv


 Current liabilities = $50,000 + $100,000 + $80,000 = $230,000
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 Working capital = $580,000 - $230,000 = $350,000
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 Shareholder’s equity = $100,000 + $150,000 + $150,000 + $70,000cv cv cv cv cv cv cv cv cv


= $470,000 cv




(b) EPS = $500,000/10,000 = $50 per share
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(c) Par value = $15; capital surplus = $150,000/10,000 =
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$15 Market price = $15 + $15 = $30 per share
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2.4
(a) Shareholder’s equity in 2021 = $700 - $510 = cv cv cv cv cv cv cv cv


$190(M) Shareholder’s equity in 2022 = $900 -
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$640 = $260(M)
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(b) Net working capital in 2021 = $100 - $60 =
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$40(M) Net working capital in 2022 = $200 - $90
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= $110(M)
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(c) The income taxes in year 2022:
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($2,350 - $1,130-$420-$210) *0.35 = $206.5(M)
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(d) $383.50 + $420=$803.50 (M) cv cv cv


(Cash from Operating activities = Net income + Depreciation)
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, 2.5 (a)

Company A cv Company B cv


ROE (= Net income/Equity)
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ROA
(= Net income + interest expense (1-tax
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rate)/Average total assets)
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(b) Company A has performed better in terms of profitability.
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(c) If two companies were merged, the impact on the results of ROE
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could be positive under the situation where the Company A leads the
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acquisition using a stock swap instead of issuing new stocks for M&A
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cost. If Company A uses a stock swap, the stock value wouldn’t be
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decreased in terms of scarcity.
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2.6
Inventory turnover ratio (2021) = Sales/Average inventory balance
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= $3,776,395 / ($202,794 + $231,313)×0.5 cv cv cv cv cv


= 17.4 times cv cv




cv Inventory turnover ratio (2022) = 15.6
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times
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This ratio shows how many times the inventory of a firm is sold and replaced
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over a specific period. From the data, Metronix was holding more stocks of
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inventory than last year; having more inventories on stock is unproductive.
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2.7 (b)

2.8 (b)

2.9 (d)


2.10

Given Olson’s EPS = $8 per share; Cash dividend = $4 per share; Book value
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per share = $80; Changes in the retained earnings = $24 million; Total debt
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= $240 million; Find debt ratio = total debt/total assets
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Net Income
 EPS   $8
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X
Where X = the number of outstanding shares
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Total shareholders' equity
 Book value   $80
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X