Name: ____Solutions______________________

Date: _________________

Instructions

This exam is closed notes and closed books.

A calculator may be used.
A list of equations is given on the last page of the exam.
Show all work to receive full credit.

Problem 1 (32 points)

For each sentence
i. indicate what is wrong with the grammar and/or writing style and
ii. write a corrected version that preserves the intended meaning.
There may be more than one error in a sentence.
(a)

The lab experiment took several hours more than anticipated, the class was forced to work late
into the night.
i.
comma splice or run-on sentence
ii.
The class was forced to work late into the night, since the lab experiment
took several hours more than anticipated.
or
The lab experiment took several hours more than anticipated; the class was
forced to work late into the night.
or
The lab experiment took several hours more than anticipated; therefore, the
class was forced to work late into the night.

(b)

Preparing a successful party requires planning the menu, food preparation, sending invitations,
and house cleaning.
i.
parallelism
ii.
Preparing a successful party requires planning the menu, preparing food,
sending invitations, and cleaning the house.

(c)

Not only is studying mechanical engineering fun, but it enables you to solve many of the
problems of importance facing society.
i.
the correlative conjunction not only but also is not complete; clutter of
prepositional phrases
ii.
Not only is studying Mechanical Engineering fun, but it also enables you to
solve many important problems facing society.

(d)

He drilled several holes in the various parts of the machine for the purpose of making it lighter in
weight.
i.
clutter of prepositional phrases; redundant description
ii.
He drilled several holes in various parts of the machine to make it lighter.

(e)

To receive full credit, there were 3 requirements: read the book, writing a report, and giving a
presentation.
i.
the number should be written out; parallelism
ii.
To receive full credit, there were three requirements: read the book, write a
report, and give a presentation.
or
To receive full credit, there were three requirements: reading the book,
writing a report, and giving a presentation.

Professional Topics in Engineering

ME175A

page 1 of 4

Midterm
Fall 2014

Problem 2 (23 points)

You have $10,000 to invest for 5 years. Your local bank has the following accounts available:
Account 1 for $500 or over:
5.5 percent per year
(simple interest)
Account 2 for $2000 or over:
5 percent per year
(compound interest)
Account 3 for $6000 or over:
6.5 percent per year
(simple interest)
Account 4 for $10,000 or over: 6 percent per year
(compound interest)
Construct a table showing the projected amount of money in each account at the end of each of the 5
years. Which account do you prefer and why?
Account 1:
given: i = 5.5%
n=5
P = $10,000

find:

F = P (1 + in)
= $10,000 (1 + 0.055*5)
= $12,750.00

Account 2:
given: i = 5%
n=5
P = $10,000
Using compound interest (with formula): or
F = P (1 + i)^n
= $10,000 (1 + 0.05)^5
= $10,000 (1.276282)
= $12,762.82
Account 3:
given: i = 6.5%
n=5
P = $10,000

find:

F = P (1 + in)
= $10,000 (1 + 0.065*5)
= $13,250.00

Account 4:
given: i = 6%
n=5
P = $10,000
Using compound interest (with formula): or
F = P (1 + i)^n
= $10,000 (1 + 0.06)^5
= $10,000 (1.338226)
= $13,382.26

Account
Amount

(with table):
F = P (F|P i%,n)
= $10,000 (F|P 5%,5)
= $10,000 (1.27628)
= $12,762.80

(with table):
F = P (F|P i%,n)
= $10,000 (F|P 6%,5)
= $10,000 (1.33823)
= $13,382.30

1
2
3
4
$12,750.00 $12,762.82 $13,250.00 $13,382.26

Account 4 is preferred since it gives the highest future value.

Professional Topics in Engineering

ME175A

page 2 of 4

Midterm
Fall 2014

Problem 3 (25 points)

Using a 5 percent annual compound interest rate, what investment today is needed in order to
withdraw $5000 annually
(a) for 10 years?
(b) for 10 years if the first withdrawal is delayed for 2 years?
Include the cash flow diagram for both (a) and (b).
(a)

given: i = 5%
n = 10
A = $5000

Using compound interest (with formula):

P = A ((1 + i)^n 1) / (i (1 + i)^n)
= $5000 * ((1 + 0.05)^10 1) /
(0.05 (1 + 0.05)^10)
= $5000 (7.721735)
= $38,608.67

or

(with table):
P = A (P|A i%,n)
= $5000 (A|P 5%,10)
= $5000 (7.72173)
= $38,608.65

(b) given: i = 5%
n = 10
t=3
A = $5000

Using compound interest (with formula):

P = A ((1 + i)^n 1) / (i (1 + i)^n) * (1 / (1 + i)^(3-1)
= $5000 * ((1 + 0.05)^10 1) / (0.05 (1 + 0.05)^10) * (1 / (1 + 0.05)^2
= $5000 (7.721735) (0.9070295)
= $5000 (7.003841)
= $35,019.21
or
Using compound interest (with tables):
P = A (P|A i%,n) (P|F i%,t-n)
= $5000 (A|P 5%,10) (P|F 5%,2)
= $5000 (7.72173) (0.90703)
= $35,019.20

Professional Topics in Engineering

ME175A

page 3 of 4

Midterm
Fall 2014

Problem 4 (20 points)

If you deposit $4000 into an account paying 6 percent per year compounded semiannually, how much
will you have in the account after 10 years? What is the effective interest rate after 10 years?
r = 6%
m=2
n = 10 years
P = $4000
Using compound interest (with formula):
F = P (1 + ip)^n
= $4000 (1 + 0.06/2)^(2*10)
= $4000 (1.80611)
= $7224.44
Effective interest rate:
r = 6%
m=2
ieff = (1 + 0.06/2)2 1
= 0.0609
= 6.090%

Professional Topics in Engineering

ME175A

or

(with table):
F = P (F|P i%,n)
= $4000 (F|P 3%,20)
= $4000 (1.80611)
= $7224.44

or

r = 6%
m = 20
ieff = (1 + 0.06/20)20 1
= 0.06174
= 6.174%

page 4 of 4

Midterm
Fall 2014