Engineering Economy 9th Edition Solutions Manual Exam Prep 2026-
200 Practice Questions & Detailed Answers | Leland Blank-Covers All
19 Chapters
1. What is the fundamental principle of the time value of money?
A) Money loses value over time due to inflation only
B) Money available today is worth more than the same amount in the future
C) Money has the same value regardless of when it is received
D) Money value is determined solely by government policy
Answer: B) Money available today is worth more than the same amount in the future
Explanation: The time value of money principle states that a sum of money has greater value now than
the same sum in the future due to its potential earning capacity through interest accumulation.
2. Which factor is used to calculate the future value of a present sum of money?
A) Discount rate
B) Interest rate
C) Depreciation rate
D) Inflation rate
Answer: B) Interest rate
Explanation: The interest rate determines how much a present sum will grow over time, calculating its
future value.
,3. What is the present value of $1,000 to be received 5 years from now at an interest rate of 5%
compounded annually?
A) $783.53
B) $1,276.28
C) $1,000
D) $1,250.00
Answer: A) $783.53
Explanation: PV = FV / (1 + i)^n = 1000 / (1.05)^5 ≈ $783.53.
4. In engineering economy, what is a "cash flow"?
A) The total revenue of a company
B) The movement of money into or out of a project, business, or investment
C) The profit margin of a product
D) The total assets of a firm
Answer: B) The movement of money into or out of a project, business, or investment
Explanation: Cash flows are the inflows and outflows of money over time that form the basis of
economic analysis in engineering projects.
5. Which of the following is a noneconomic attribute that may influence engineering decisions?
A) Interest rate
,B) Morale and goodwill
C) Tax rate
D) Depreciation
Answer: B) Morale and goodwill
Explanation: Noneconomic attributes include morale, goodwill, dependability, acceptance, friendship,
convenience, and aesthetics.
6. The singlepayment compound amount factor is denoted by:
A) (P/F, i, n)
B) (F/P, i, n)
C) (A/P, i, n)
D) (P/A, i, n)
Answer: B) (F/P, i, n)
Explanation: The (F/P, i, n) factor finds the future value F of a present amount P given interest rate i over
n periods.
7. The singlepayment present worth factor is denoted by:
A) (F/P, i, n)
B) (P/F, i, n)
C) (A/F, i, n)
D) (F/A, i, n)
, Answer: B) (P/F, i, n)
Explanation: The (P/F, i, n) factor finds the present value P of a future amount F given interest rate i over
n periods.
8. What is the future value of $500 invested for 3 years at 6% annual interest compounded annually?
A) $590.00
B) $595.51
C) $600.00
D) $650.00
Answer: B) $595.51
Explanation: F = P(1+i)^n = 500(1.06)^3 = 500(1.191016) = $595.51.
9. An engineering economy study typically involves which of the following elements?
A) Problem identification and definition of objectives
B) Cash flow estimation
C) Financial analysis
D) All of the above
Answer: D) All of the above
200 Practice Questions & Detailed Answers | Leland Blank-Covers All
19 Chapters
1. What is the fundamental principle of the time value of money?
A) Money loses value over time due to inflation only
B) Money available today is worth more than the same amount in the future
C) Money has the same value regardless of when it is received
D) Money value is determined solely by government policy
Answer: B) Money available today is worth more than the same amount in the future
Explanation: The time value of money principle states that a sum of money has greater value now than
the same sum in the future due to its potential earning capacity through interest accumulation.
2. Which factor is used to calculate the future value of a present sum of money?
A) Discount rate
B) Interest rate
C) Depreciation rate
D) Inflation rate
Answer: B) Interest rate
Explanation: The interest rate determines how much a present sum will grow over time, calculating its
future value.
,3. What is the present value of $1,000 to be received 5 years from now at an interest rate of 5%
compounded annually?
A) $783.53
B) $1,276.28
C) $1,000
D) $1,250.00
Answer: A) $783.53
Explanation: PV = FV / (1 + i)^n = 1000 / (1.05)^5 ≈ $783.53.
4. In engineering economy, what is a "cash flow"?
A) The total revenue of a company
B) The movement of money into or out of a project, business, or investment
C) The profit margin of a product
D) The total assets of a firm
Answer: B) The movement of money into or out of a project, business, or investment
Explanation: Cash flows are the inflows and outflows of money over time that form the basis of
economic analysis in engineering projects.
5. Which of the following is a noneconomic attribute that may influence engineering decisions?
A) Interest rate
,B) Morale and goodwill
C) Tax rate
D) Depreciation
Answer: B) Morale and goodwill
Explanation: Noneconomic attributes include morale, goodwill, dependability, acceptance, friendship,
convenience, and aesthetics.
6. The singlepayment compound amount factor is denoted by:
A) (P/F, i, n)
B) (F/P, i, n)
C) (A/P, i, n)
D) (P/A, i, n)
Answer: B) (F/P, i, n)
Explanation: The (F/P, i, n) factor finds the future value F of a present amount P given interest rate i over
n periods.
7. The singlepayment present worth factor is denoted by:
A) (F/P, i, n)
B) (P/F, i, n)
C) (A/F, i, n)
D) (F/A, i, n)
, Answer: B) (P/F, i, n)
Explanation: The (P/F, i, n) factor finds the present value P of a future amount F given interest rate i over
n periods.
8. What is the future value of $500 invested for 3 years at 6% annual interest compounded annually?
A) $590.00
B) $595.51
C) $600.00
D) $650.00
Answer: B) $595.51
Explanation: F = P(1+i)^n = 500(1.06)^3 = 500(1.191016) = $595.51.
9. An engineering economy study typically involves which of the following elements?
A) Problem identification and definition of objectives
B) Cash flow estimation
C) Financial analysis
D) All of the above
Answer: D) All of the above
