ENGINEERING ECONOMY EXAM 2 COMPLETE
STUDY GUIDE AND ECONOMIC ANALYSIS FOR
ENGINEERS REVIEW 2026
◉ Why is engineering economy important to engineers?
Answer: It helps engineers make economic decisions, select from
multiple alternatives, and apply time value of money, economic
equivalence, and cost estimation.
◉ What are the steps in decision making?
Answer: 1. Understand the problem 2. Collect relevant information
3. Define the set of feasible alternatives 4. Identify criteria for
decision making 5. Evaluate alternatives and apply sensitivity
analysis 6. Select the best alternative 7. Implement and monitor
results.
◉ What is the first step in an engineering economic study?
Answer: Problem Description/Available Data/Alternatives for Cash
Flows and Other Estimates.
◉ What is the measure of worth criterion?
Answer: It is used to analyze and determine the best alternative in
an engineering economic study.
, ◉ What is professional ethics in engineering?
Answer: Professional ethics are formal standards or codes that guide
a person in work activities and decision making.
◉ What is the difference between universal morals and individual
morals?
Answer: Universal morals are fundamental beliefs shared by society,
while individual morals are personal beliefs that vary from person to
person.
◉ What does interest represent in engineering economy?
Answer: Interest is the manifestation of the time value of money,
representing the difference between an ending amount and the
original amount.
◉ How is interest calculated?
Answer: Interest = End Amount - Original Amount.
◉ What is the formula for calculating interest rate?
Answer: Interest Rate = (Interest / Original Amount) × 100.
◉ In the sample problem, what was the interest paid on a loan of
₱10,000 that totaled ₱10,700 after one year?
STUDY GUIDE AND ECONOMIC ANALYSIS FOR
ENGINEERS REVIEW 2026
◉ Why is engineering economy important to engineers?
Answer: It helps engineers make economic decisions, select from
multiple alternatives, and apply time value of money, economic
equivalence, and cost estimation.
◉ What are the steps in decision making?
Answer: 1. Understand the problem 2. Collect relevant information
3. Define the set of feasible alternatives 4. Identify criteria for
decision making 5. Evaluate alternatives and apply sensitivity
analysis 6. Select the best alternative 7. Implement and monitor
results.
◉ What is the first step in an engineering economic study?
Answer: Problem Description/Available Data/Alternatives for Cash
Flows and Other Estimates.
◉ What is the measure of worth criterion?
Answer: It is used to analyze and determine the best alternative in
an engineering economic study.
, ◉ What is professional ethics in engineering?
Answer: Professional ethics are formal standards or codes that guide
a person in work activities and decision making.
◉ What is the difference between universal morals and individual
morals?
Answer: Universal morals are fundamental beliefs shared by society,
while individual morals are personal beliefs that vary from person to
person.
◉ What does interest represent in engineering economy?
Answer: Interest is the manifestation of the time value of money,
representing the difference between an ending amount and the
original amount.
◉ How is interest calculated?
Answer: Interest = End Amount - Original Amount.
◉ What is the formula for calculating interest rate?
Answer: Interest Rate = (Interest / Original Amount) × 100.
◉ In the sample problem, what was the interest paid on a loan of
₱10,000 that totaled ₱10,700 after one year?
