SOLUTIONS MANUAL For Contemporary Engineering Economics SEVENTH EDITION CHAN PARK

,ContemporaryEngineeringEconomics
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SEVENTH EDITION
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CHAN PARK
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,Chapter 1 Engineering Economic Decisions
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1.1
• Lease
o Deposit (typically one month worth of deposit) refundable when lease
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expires.
o Monthly lease payment Monthly l l l

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o maintenance fees Monthly
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utility expenses
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o
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• Buy
Closing fees
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Downpayment
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o Monthly mortgage payments l l
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o Property taxes l l

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o Monthly utility fees Monthly l l l



maintenance fees Repair
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o expenses l
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o Homeowners’ association fee (if applicable) l l l l
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o
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o
1.2

• Option 1: l




o Total amount at the end of two years: $1,150
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• Option 2: l



o Loan $500 to a friend for one year and receive $600
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o Deposit $500 (left over) in a back at 3% for two years:
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$500(1.03)(1.03) = $530.45 l l




o Deposit $600 received from your friend at 3% per year for a year:
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$600(1.03) = $618 l l



Total amount at the end of two years:
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$530.45 + $618 = $1,148.45 l l l l



These two options are about the same. But considering the trustworthiness, you
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could go with Option 2.
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, Chapter 2 Accounting Information for Engineering
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Economic Decisions
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2.1
(2) Income statement; (1) balance sheet; (3) cash flow statement; (4) operating
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activities; (5) investing activities, and (6) financing activities; (7) capital account
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(paid-in capital)
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2.2
(7), (8), (1), (11), (3), (9)
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2.3
(a)

• Current assets = $150,000 + $200,000 + $150,000 + $50,000 + $30,000
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= $580,000 l



• Current liabilities = $50,000 + $100,000 + $80,000 = $230,000 l l l l l l l l l



• Working capital = $580,000 - $230,000 = $350,000 l l l l l l l



• Shareholder’s equity = $100,000 + $150,000 + $150,000 + $70,000 l l l l l l l l l



= $470,000 l




(b) EPS = $500,000/10,000 = $50 per share l l l l l l




(c) Par value = $15; capital surplus = $150,000/10,000 = $15
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l Market price = $15 + $15 = $30 per share l l l l l l l l l




2.4
(a) Shareholder’s equity in 2021 = $700 - $510 = $190(M) l l l l l l l l l



Shareholder’s equity in 2022 = $900 - $640 = $260(M)
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(b) Net working capital in 2021 = $100 - $60 = $40(M) Net
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working capital in 2022 = $200 - $90 = $110(M)
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(c) The income taxes in year 2022:
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($2,350 - $1,130-$420-$210) *0.35 = $206.5(M) l l l l l




(d) $383.50 + $420=$803.50 (M) l l l



(Cash from Operating activities = Net income + Depreciation)
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