Page 1 of 75
CM 2113 – CHAO WANG EXAM 2026- QUESTIONS LATEST 2026
– 2027 VERSION SOLVED QUESTIONS & ANSWERS
CM 2113 – CHAO WANG
COMPREHENSIVE 250 MULTIPLE-CHOICE EXAMINATION
SECTION 1: TIME VALUE OF MONEY & ENGINEERING ECONOMICS (Questions 1-50)
1. The Time Value of Money is based on the premise that money can generate
__________ over a period of time.
A. Equipment
B. Interest
C. Capital
D. Budgets
Correct Answer: B
Rationale: The fundamental premise of the time value of money is that a dollar today is
worth more than a dollar in the future because money can earn interest over time. This
interest-generating capacity is the core concept behind all engineering economic
analysis.
2. Payments that differ in amount may be equal if made at different points in time.
This concept is known as __________.
A. Monetary values
B. Time value
C. Equivalence
D. Equality
Correct Answer: C
Rationale: Equivalence is the concept that different cash flows at different points in
time can have the same economic value when adjusted for the time value of money.
This allows for meaningful comparison of alternatives with different timing of costs and
benefits.
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3. Comparing a future cost of one alternative with the present worth cost of a
second alternative is valid and meaningful. (True/False)
A. True
B. False
Correct Answer: B
Rationale: To make valid comparisons, all costs must be compared at the same point in
time. Comparing a future cost directly to a present worth cost without adjusting for the
time value of money is not meaningful. Both alternatives must be converted to either
present worth or future worth using appropriate interest factors.
4. The reason why the value of money increases with time is because of the
__________.
A. Inflation rate
B. Interest rate
C. Risk premium
D. Opportunity cost
Correct Answer: B
Rationale: The value of money increases over time primarily due to the interest rate,
which represents the return that money can earn when invested. This is the
fundamental driver of the time value of money.
5. Look up the following factor value: (P/F, 5%, 6)
A. 0.147
B. 0.746
C. 1.340
D. 0.784
Correct Answer: B
Rationale: The single-payment present worth factor (P/F, 5%, 6) equals 0.746. This
factor is used to find the present worth of a single future payment given an interest rate
of 5% over 6 periods.
6. Look up the following factor value: (P/A, 10%, 15)
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A. 0.031
B. 4.177
C. 7.606
D. 0.131
Correct Answer: C
Rationale: The uniform-series present worth factor (P/A, 10%, 15) equals 7.606. This
factor converts a uniform series of payments into an equivalent present worth at 10%
interest over 15 periods.
7. Look up the following factor value: (A/F, 2%, 8)
A. 0.117
B. 0.137
C. 0.853
D. 1.172
Correct Answer: A
Rationale: The sinking fund factor (A/F, 2%, 8) equals 0.117. This factor determines the
uniform series amount that must be set aside each period to accumulate a future
amount at 2% interest over 8 periods.
8. Look up the following factor value: (A/P, 4%, 2)
A. 0.490
B. 0.925
C. 0.530
D. 2.040
Correct Answer: C
Rationale: The capital recovery factor (A/P, 4%, 2) equals 0.530. This factor converts a
present worth amount into an equivalent uniform series payment at 4% interest over 2
periods.
9. Look up the following factor value: (F/P, 3%, 4)
A. 4.184
B. 1.126
C. 0.239
D. 0.269
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Correct Answer: B
Rationale: The single-payment compound amount factor (F/P, 3%, 4) equals 1.126. This
factor determines the future worth of a single present payment at 3% interest over 4
periods.
10. Look up the following factor value: (F/A, 9%, 11)
A. 0.388
B. 17.560
C. 0.057
D. 6.805
Correct Answer: B
Rationale: The uniform-series compound amount factor (F/A, 9%, 11) equals 17.560.
This factor converts a uniform series of payments into an equivalent future worth at 9%
interest over 11 periods.
11. A contractor is investing $5,000 per year in savings certificates at an annual
interest rate of 10% and plans to continue the investment program for 5 years. What
will the value of the contractor's investment be at the end of 5 years?
A. $62,890
B. $38,610
C. $30,525
D. $18,955
Correct Answer: C
Rationale: Using the uniform-series compound amount factor (F/A, 10%, 5) = 6.105, the
future value is $5,000 × 6.105 = $30,525. This represents the accumulated value of the
annual investments with compound interest.
12. A contractor plans to purchase a pickup truck in 10 years. How much should the
contractor invest at 5% interest today to have the $30,000 needed to purchase the
truck at the end of 10 years?
A. $15,000
B. $18,630
C. $19,350
D. $18,420
CM 2113 – CHAO WANG EXAM 2026- QUESTIONS LATEST 2026
– 2027 VERSION SOLVED QUESTIONS & ANSWERS
CM 2113 – CHAO WANG
COMPREHENSIVE 250 MULTIPLE-CHOICE EXAMINATION
SECTION 1: TIME VALUE OF MONEY & ENGINEERING ECONOMICS (Questions 1-50)
1. The Time Value of Money is based on the premise that money can generate
__________ over a period of time.
A. Equipment
B. Interest
C. Capital
D. Budgets
Correct Answer: B
Rationale: The fundamental premise of the time value of money is that a dollar today is
worth more than a dollar in the future because money can earn interest over time. This
interest-generating capacity is the core concept behind all engineering economic
analysis.
2. Payments that differ in amount may be equal if made at different points in time.
This concept is known as __________.
A. Monetary values
B. Time value
C. Equivalence
D. Equality
Correct Answer: C
Rationale: Equivalence is the concept that different cash flows at different points in
time can have the same economic value when adjusted for the time value of money.
This allows for meaningful comparison of alternatives with different timing of costs and
benefits.
, Page 2 of 75
3. Comparing a future cost of one alternative with the present worth cost of a
second alternative is valid and meaningful. (True/False)
A. True
B. False
Correct Answer: B
Rationale: To make valid comparisons, all costs must be compared at the same point in
time. Comparing a future cost directly to a present worth cost without adjusting for the
time value of money is not meaningful. Both alternatives must be converted to either
present worth or future worth using appropriate interest factors.
4. The reason why the value of money increases with time is because of the
__________.
A. Inflation rate
B. Interest rate
C. Risk premium
D. Opportunity cost
Correct Answer: B
Rationale: The value of money increases over time primarily due to the interest rate,
which represents the return that money can earn when invested. This is the
fundamental driver of the time value of money.
5. Look up the following factor value: (P/F, 5%, 6)
A. 0.147
B. 0.746
C. 1.340
D. 0.784
Correct Answer: B
Rationale: The single-payment present worth factor (P/F, 5%, 6) equals 0.746. This
factor is used to find the present worth of a single future payment given an interest rate
of 5% over 6 periods.
6. Look up the following factor value: (P/A, 10%, 15)
, Page 3 of 75
A. 0.031
B. 4.177
C. 7.606
D. 0.131
Correct Answer: C
Rationale: The uniform-series present worth factor (P/A, 10%, 15) equals 7.606. This
factor converts a uniform series of payments into an equivalent present worth at 10%
interest over 15 periods.
7. Look up the following factor value: (A/F, 2%, 8)
A. 0.117
B. 0.137
C. 0.853
D. 1.172
Correct Answer: A
Rationale: The sinking fund factor (A/F, 2%, 8) equals 0.117. This factor determines the
uniform series amount that must be set aside each period to accumulate a future
amount at 2% interest over 8 periods.
8. Look up the following factor value: (A/P, 4%, 2)
A. 0.490
B. 0.925
C. 0.530
D. 2.040
Correct Answer: C
Rationale: The capital recovery factor (A/P, 4%, 2) equals 0.530. This factor converts a
present worth amount into an equivalent uniform series payment at 4% interest over 2
periods.
9. Look up the following factor value: (F/P, 3%, 4)
A. 4.184
B. 1.126
C. 0.239
D. 0.269
, Page 4 of 75
Correct Answer: B
Rationale: The single-payment compound amount factor (F/P, 3%, 4) equals 1.126. This
factor determines the future worth of a single present payment at 3% interest over 4
periods.
10. Look up the following factor value: (F/A, 9%, 11)
A. 0.388
B. 17.560
C. 0.057
D. 6.805
Correct Answer: B
Rationale: The uniform-series compound amount factor (F/A, 9%, 11) equals 17.560.
This factor converts a uniform series of payments into an equivalent future worth at 9%
interest over 11 periods.
11. A contractor is investing $5,000 per year in savings certificates at an annual
interest rate of 10% and plans to continue the investment program for 5 years. What
will the value of the contractor's investment be at the end of 5 years?
A. $62,890
B. $38,610
C. $30,525
D. $18,955
Correct Answer: C
Rationale: Using the uniform-series compound amount factor (F/A, 10%, 5) = 6.105, the
future value is $5,000 × 6.105 = $30,525. This represents the accumulated value of the
annual investments with compound interest.
12. A contractor plans to purchase a pickup truck in 10 years. How much should the
contractor invest at 5% interest today to have the $30,000 needed to purchase the
truck at the end of 10 years?
A. $15,000
B. $18,630
C. $19,350
D. $18,420
