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# EBMC 3103 ENGINEERING ECONOMICS

## IJAZAH SARJANA MUDA DALAM PENGURUSAN

TEKNOLOGI

SEPTEMBER 2013

EBMC 3103
ENGINEERING ECONOMICS

NO. MATRIKULASI

810128016402002

810128-01-6402

NO. TELEFON

07-7716368

E-MEL

fmei2801@yahoo.com.my

PUSAT PEMBELAJARAN

## EBMC 3103 ENGINEERING ECONOMICS

QUESTION 1

(a)
The idea that money available at the present time is worth more than the same amount in
the future due to its potential earning capacity. This core principle of finance holds that provided
money can earn interest, any amount of money is worth more the sooner it is received.Also
referred to as Present Discounted Value. Everyone knows that money deposited in a savings
account will earn interest. Because of this universal fact, we would prefer to receive money today
rather than the same amount in the future.
For example, assuming a 5% interest rate, \$100 invested today will be worth \$105 in one year
(\$100 multiplied by 1.05). Conversely, \$100 received one year from now is only worth \$95.24
today (\$100divided by 1.05), assuming s 5% interest rate.

(b)
P = 400
n= 5 YEARS
i= 10%
F=?

i= 10%

RM400

RM400

RM400

RM400

F=?

RM400

## EBMC 3103 ENGINEERING ECONOMICS

(c)
A Nominal Interest Rate, r, can be defined as an interest Rate that does not include any
consideration of compounding Nominal means, in name only, not the real rate in this case.
Nominal interest rate is rate which includes inflation.
Mathematically, we have the following definition:

## r = (interest rate per period) x (No. of Periods)

An examples of Nominal Interest Rate are as follow: 1.5% per month for 24 months
Same as: (1.5%) (24) = 36% per 24 months
1.5% per month for 12 months
Same as (1.5%) (12 months) = 18%/year
1.5% per month for 6 months
Same as: (1.5%) (6 months) = 9%/6 months or semi-annual period
1% per week for 1 year
Same as: (1%)(52 weeks) = 52% per year

## EBMC 3103 ENGINEERING ECONOMICS

QUESTION 2

(a)
A measure of the decrease in value of an asset over a specific period of time in the certain asset
life. This usually pertains to property such as asset, real estate, vehicle and etc. that can lose value
due to indirect causes such as a decline in the quality or other external factors. It could be no
market value after a certain life period. Or Our text book explain: It is the anticipated period of
time in which the investment depreciates from the present cost to a salvage value or resale value.

(b) (i)
i = 10%
RM22000

RM22000

RM2200

RM1516.31

(b) (ii)
Calculating the initial investment
Calculating the present value
Justified amount to purchase equipment \$83,397.31

RM22000

RM22000

## EBMC 3103 ENGINEERING ECONOMICS

QUESTION 3

(a)
Calculate the effective rate per semi-annual period.
Calculating effective rate:
r = (1+i/n)^n - 1
= (1 + 0.24/2)^2 - 1
= 25.44%

(b)
SemiAnnualcompunding
r=(1+i/n)^n1
=(1+0.20/2)^21
=21.00%
AnnualCompounding
r=(1+i/n)^n1
=(1+0.20/1)^11
=20.00%

## EBMC 3103 ENGINEERING ECONOMICS

QUESTION 4

(i)

(ii)
G = - ((105-47500)/7) = - 7500 m.u.
A' = 105
n=8 & i=10%
F=F'+F*= A'(F/A, 10, 8) + G(F/G, 10, 8)
=105((1.18-1)/0.1) 7500/0.1(((1.18-1)/0.1)-8)
= 885897.2