Name: ___________________________________

Date: _________________

Final Exam, Part A

(25% of the Final Exam grade)
This assignment is due by the end of class on Monday, December 8.
Assignments turned in after class on December 8, will be given a zero.
For the following problem, solve parts (a), (d), (g), (j), and (m) by using Excels functions:
i. indicate which Excel function you used,
ii. show what values you entered into the function, and
iii. give your final answer.
Show your work to receive full credit.
1. Company ABC is considering investing in a new machine which would cost $50,000. The
company foresees using the machine for 15 years, at the end of which there will be no salvage
value. To operate the machine, yearly labor costs would increase $2000. However, the machine
will save $8000 per year on maintenance costs. The companys MARR is 5 percent per year.
(a) What is the present worth of this investment?
(b) Based on present worth, what is the decision rule for judging the attractiveness of
investments?
(c) Based on the present worth, should Company ABC purchase the machine?

(d) What is the future worth of this investment?

(e) Based on future worth, what is the decision rule for judging the attractiveness of investments?
(f) Based on the future worth, should Company ABC purchase the machine?

(g) What is the annual worth of this investment?

(h) Based on annual worth, what is the decision rule for judging the attractiveness of investments?
(i) Based on the annual worth, should Company ABC purchase the machine?

(j) What is the internal rate of return of this investment?

(k) Based on internal rate of return, what is the decision rule for judging the attractiveness of
investments?
(l) Based on the internal rate of return, should Company ABC purchase the machine?

(m) What is the external rate of return of this investment?

(n) Based on external rate of return, what is the decision rule for judging the attractiveness of
investments?
(o) Based on the external rate of return, should Company ABC purchase the machine?

Professional Topics in Engineering

ME175A

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Final Exam, Part A

Fall 2014