, SOLUTION MANUAL FOR FUNDAMENTALS OF
ENGINEERING ECONOMICS 4TH EDITION CHAN PARK
Chapter 1 Engineering Economic Decisions
1.1) Not provided
For The Wall Street Journal, go to the Front page to find the section on “What’s
News.” This is a section on a brief summary on major headlines of the day’s
news. Quickly browse through the news summary to see if there is any news
related to business investment. The best places to find the major business news on
investment are sections on “BUSINESS”, “MARKETS” or “TECH.”
1.2)
Not provided
Some of the well-known business publications are:
Daily Newspapers:
o The Wall Street Journal
o The New York Times (Business Section)
o Financial Times
Weekly or Monthly Magazines:
o BusinessWeek
o Forbes
o Money
o Smart Money
o Fortune
,Chapter 2: Time Value of Money
2.1) I (iP)N (0.06)($2, 000)(5) $600
2.2)
Simple interest:
$20,000 $10,000(1 0.075N )
(1 0.075N ) 2
1
N 13.33 14 years
0.075
Compound interest:
$20,000 $10,000(1 0.07)N
(1 0.07)N 2
N 10.24 11years
2.3)
Simple interest:
I iPN (0.10)($10, 000)(5) $5, 000
Compound interest:
I P[(1 i)N 1] $10, 000(1.6105 1) $6,105
2.4)
Option 1: Compound interest with 8.5%:
F $4, 500(1 0.085)5 $4, 500(1.5037) $6, 766.65
Option 2: Simple interest with 9%:
$4, 500(1 0.09 5) $5, 000(1.45) $6, 525
Option 1 is still better.
, 2.5)
Compound interest:
F $1, 000(1 0.065)5
$1, 370.09
Simple interest:
F $1, 000(1 0.068(5))
$1, 340
The compound interest option is better.
2.6)
End of Year Principal Interest Remaining
Repayment payment Balance
0 $15,000.00
1 $4,620.50 $1,200.00 $10,379.50
2 $4,990.14 $830.36 $5,389.36
3 $5,389.35 $431.15 $0
2.7)
P $22, 000(P / F , 5%, 5) $22, 000(0.7835) $17, 237.58
2.8) F $30, 000(F / P, 9%, 3) $30, 000(1.295) $38,850.87
2.9)
F $100(F / P,10%,10) $200(F / P,10%,8) $688
2.10) F $250, 000(F / P, 6%,10) $447, 712
2.11) P $300, 000(P / F ,8%,10) $138, 958
2.12) i 10.5% , two-year discount rate is (1 0.105)2 1.221 (or 22.1%)
2.13)
(a) F $5, 000(F / P, 7%, 5) $7, 013
ENGINEERING ECONOMICS 4TH EDITION CHAN PARK
Chapter 1 Engineering Economic Decisions
1.1) Not provided
For The Wall Street Journal, go to the Front page to find the section on “What’s
News.” This is a section on a brief summary on major headlines of the day’s
news. Quickly browse through the news summary to see if there is any news
related to business investment. The best places to find the major business news on
investment are sections on “BUSINESS”, “MARKETS” or “TECH.”
1.2)
Not provided
Some of the well-known business publications are:
Daily Newspapers:
o The Wall Street Journal
o The New York Times (Business Section)
o Financial Times
Weekly or Monthly Magazines:
o BusinessWeek
o Forbes
o Money
o Smart Money
o Fortune
,Chapter 2: Time Value of Money
2.1) I (iP)N (0.06)($2, 000)(5) $600
2.2)
Simple interest:
$20,000 $10,000(1 0.075N )
(1 0.075N ) 2
1
N 13.33 14 years
0.075
Compound interest:
$20,000 $10,000(1 0.07)N
(1 0.07)N 2
N 10.24 11years
2.3)
Simple interest:
I iPN (0.10)($10, 000)(5) $5, 000
Compound interest:
I P[(1 i)N 1] $10, 000(1.6105 1) $6,105
2.4)
Option 1: Compound interest with 8.5%:
F $4, 500(1 0.085)5 $4, 500(1.5037) $6, 766.65
Option 2: Simple interest with 9%:
$4, 500(1 0.09 5) $5, 000(1.45) $6, 525
Option 1 is still better.
, 2.5)
Compound interest:
F $1, 000(1 0.065)5
$1, 370.09
Simple interest:
F $1, 000(1 0.068(5))
$1, 340
The compound interest option is better.
2.6)
End of Year Principal Interest Remaining
Repayment payment Balance
0 $15,000.00
1 $4,620.50 $1,200.00 $10,379.50
2 $4,990.14 $830.36 $5,389.36
3 $5,389.35 $431.15 $0
2.7)
P $22, 000(P / F , 5%, 5) $22, 000(0.7835) $17, 237.58
2.8) F $30, 000(F / P, 9%, 3) $30, 000(1.295) $38,850.87
2.9)
F $100(F / P,10%,10) $200(F / P,10%,8) $688
2.10) F $250, 000(F / P, 6%,10) $447, 712
2.11) P $300, 000(P / F ,8%,10) $138, 958
2.12) i 10.5% , two-year discount rate is (1 0.105)2 1.221 (or 22.1%)
2.13)
(a) F $5, 000(F / P, 7%, 5) $7, 013
