INSTRUCTOR’S SOLUTIONS MANUAL
Contemporary Engineering Economics
SEVENTH EDITION
PARK
,______________________________________________________________________________
The author and publisher of this book have used their best efforts in preparing this book.
These efforts include the development, research, and testing of the theories and programs
to determine their effectiveness. The author and publisher make no warranty of any kind,
expressed or implied, with regard to these programs or the documentation contained in
this book. The author and publisher shall not be liable in any event for incidental or
consequential damages in connection with, or arising out of, the furnishing, performance,
or use of these programs.
Reproduced by Pearson from electronic files supplied by the author.
Copyright © 2023, 2022, 2014, 2008 by Pearson Education, Inc. 221 River Street,
Hoboken, NJ 07030. All rights reserved.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.
ISBN-13: 978-0-13-763287-9
ISBN-10: 0-13-763287-8
,Contemporary Engineering Economics, 7th ed. ©2023
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.
1
Copyright © 2023 Pearson Education, Inc.
, Contemporary Engineering Economics, 7th ed. ©2023
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)
1
Copyright © 2023 Pearson Education, Inc.
Contemporary Engineering Economics
SEVENTH EDITION
PARK
,______________________________________________________________________________
The author and publisher of this book have used their best efforts in preparing this book.
These efforts include the development, research, and testing of the theories and programs
to determine their effectiveness. The author and publisher make no warranty of any kind,
expressed or implied, with regard to these programs or the documentation contained in
this book. The author and publisher shall not be liable in any event for incidental or
consequential damages in connection with, or arising out of, the furnishing, performance,
or use of these programs.
Reproduced by Pearson from electronic files supplied by the author.
Copyright © 2023, 2022, 2014, 2008 by Pearson Education, Inc. 221 River Street,
Hoboken, NJ 07030. All rights reserved.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.
ISBN-13: 978-0-13-763287-9
ISBN-10: 0-13-763287-8
,Contemporary Engineering Economics, 7th ed. ©2023
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.
1
Copyright © 2023 Pearson Education, Inc.
, Contemporary Engineering Economics, 7th ed. ©2023
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)
1
Copyright © 2023 Pearson Education, Inc.
