Solutions Manual For Contemporary Engineering Economics Seventh Edition by Chan Park

Solutions Manual For Contemporary Engineering Economics Seventh Edition by Chan Park Chapter 1 Engineering Economic Decisions 1.1 • Lease o Deposit (typically one month worth of deposit) refundable when lease expires. o Monthly lease payment o Monthly maintenance fees o Monthly utility expenses • Buy o Closing fees o Down payment o Monthly mortgage payments o Property taxes o Monthly utility fees o Monthly maintenance fees o Repair expenses o Homeowners’ association fee (if applicable) 1.2 • Option 1: o Total amount at the end of two years: $1,150 • Option 2: o Loan $500 to a friend for one year and receive $600 o Deposit $500 (left over) in a back at 3% for two years: $500(1.03)(1.03) = $530.45 o Deposit $600 received from your friend at 3% per year for a year: $600(1.03) = $618 Total amount at the end of two years: $530.45 + $618 = $1,148.45 These two options are about the same. But considering the trustworthiness, you could go with Option 2. Chapter 2 Accounting Information for Engineering Economic Decisions 2.1 (2) Income statement; (1) balance sheet; (3) cash flow statement; (4) operating activities; (5) investing activities, and (6) financing activities; (7) capital account (paid-in capital) 2.2 (7), (8), (1), (11), (3), (9) 2.3 (a) • Current assets = $150,000 + $200,000 + $150,000 + $50,000 + $30,000 = $580,000 • Current liabilities = $50,000 + $100,000 + $80,000 = $230,000 • Working capital = $580,000 - $230,000 = $350,000 • Shareholder’s equity = $100,000 + $150,000 + $150,000 + $70,000 = $470,000 (b) EPS = $500,000/10,000 = $50 per share (c) Par value = $15; capital surplus = $150,000/10,000 = $15 Market price = $15 + $15 = $30 per share 2.4 (a) Shareholder’s equity in 2021 = $700 - $510 = $190(M) Shareholder’s equity in 2022 = $900 - $640 = $260(M) (b) Net working capital in 2021 = $100 - $60 = $40(M) Net working capital in 2022 = $200 - $90 = $110(M) (c) The income taxes in year 2022: ($2,350 - $1,130-$420-$210) *0.35 = $206.5(M) (d) $383.50 + $420=$803.50 (M) (Cash from Operating activities = Net income + Depreciation)