ECN 801 Final Exam Review and Preparation Notes | High-Yield
Questions & Verified Answers | Toronto Metropolitan University | PDF
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Toronto Metropolitan University
DEPARTMENT OF ECONOMICS
ECN 801 Principles of Engineering Economics
Final Exam
STUDENT’S NAME:
(Please Print)
ID#
Good Luck!!!!!!
1) Salvador Industries bought land and built its plant 15 years ago. The depreciation on
the building is calculated using the straight-line method, with a life of 30 years and a
salvage value of $52,000. Land is not depreciated. The depreciation for the equipment,
all of which was purchased at the same time the plant was constructed, is calculated
using declining balance at percent 20%. Salvador currently has two outstanding loans:
one for $44,000 due December 31,2020, and another one for which the next payment is
due in four years. During April 2020, there was a flood in the building because a nearby
river overflowed its banks after unusually heavy rains. Pumping out the water and
cleaning up the basement and the first floor of the building took a week. Manufacturing
was suspended during this period and some inventory was damaged. Due to
inadequate insurance, this unusual and unexpected event cost the company $96,000,
net.
,
,Using the information from the balance sheet and paragraph above, find the value of
Retained Earnings. The answer is within 30,000 of which of the following?
A) 1,200,882
B) 1,300,882
C) 1,400,882
D) 1,500,882
E) None of the above answers are correct.
, 2) You are responsible for managing the construction of a new skateboard park. One
design being considered has an installation cost of $700,000. As far as maintenance,
the park will need to be repaved every 5 years starting 15 years after construction, at a
cost of $200,000 each time it is paved. Assuming the park will essentially have an
infinite life, what is the present worth of the costs associated with this park design? The
interest rate is 6%. The answer within 40,000 of which of the following?
A) 950,000
B) 2,090,000
C) 2,520,000
D) 1,030,000
E) None of the answers are correct
Questions & Verified Answers | Toronto Metropolitan University | PDF
Download
Toronto Metropolitan University
DEPARTMENT OF ECONOMICS
ECN 801 Principles of Engineering Economics
Final Exam
STUDENT’S NAME:
(Please Print)
ID#
Good Luck!!!!!!
1) Salvador Industries bought land and built its plant 15 years ago. The depreciation on
the building is calculated using the straight-line method, with a life of 30 years and a
salvage value of $52,000. Land is not depreciated. The depreciation for the equipment,
all of which was purchased at the same time the plant was constructed, is calculated
using declining balance at percent 20%. Salvador currently has two outstanding loans:
one for $44,000 due December 31,2020, and another one for which the next payment is
due in four years. During April 2020, there was a flood in the building because a nearby
river overflowed its banks after unusually heavy rains. Pumping out the water and
cleaning up the basement and the first floor of the building took a week. Manufacturing
was suspended during this period and some inventory was damaged. Due to
inadequate insurance, this unusual and unexpected event cost the company $96,000,
net.
,
,Using the information from the balance sheet and paragraph above, find the value of
Retained Earnings. The answer is within 30,000 of which of the following?
A) 1,200,882
B) 1,300,882
C) 1,400,882
D) 1,500,882
E) None of the above answers are correct.
, 2) You are responsible for managing the construction of a new skateboard park. One
design being considered has an installation cost of $700,000. As far as maintenance,
the park will need to be repaved every 5 years starting 15 years after construction, at a
cost of $200,000 each time it is paved. Assuming the park will essentially have an
infinite life, what is the present worth of the costs associated with this park design? The
interest rate is 6%. The answer within 40,000 of which of the following?
A) 950,000
B) 2,090,000
C) 2,520,000
D) 1,030,000
E) None of the answers are correct
