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Engineering Economy

Prepared by: Engr. Charles John S. Tayag

Name:
___________________________
________________________
Section:
__________________________
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Date:
Year/Program:

Midterm Exam
Instructions: Write the correct answer on the space provided before the number. Avoid erasures or double print on your
final answer. Use black ballpen only.

____________ 1. An asset is purchased for 10 000php. Its estimated life is 10 years, after which it will be sold
for 1000php. Find the book value during the seventh year using Straight Line Method (SLM).
____________2. An equipment for road construction was bought 3 years ago for 15000php. The expected life
of the equipment is 5 years. What is the book value of the equipment now using SYD?
____________3. A newly purchased Epson projector cost 35 000php. Its salvage value at the end of its useful
life of 5 years is 1 000php. By means of Declining Balance Method (DBM), Find the book value after 3 years.
____________4. A machine initially costs 45 000php. This machine has been operating for 3 years with
operating time of 8 hours a day. And is expected to have an economic life of 7 years if its estimated book value
after 6 years is Php 4,350php. What is the annual rate of depreciation using DBM?
____________ 5. A machine having a certain first cost has a life of 10 years and a salvage value of 6.633% of
the first cost at the end of 10 years. If it has a book value of 58 914php at the end of the 6 th year, how much is
the first cost of the machine using DBM?
____________ 6. A Textile Company bought a new equipment worth 750 000php, and additional expenses of
5 000php for delivery and 3 500php for installation. It has an estimated economic life of 5 years and salvage
value of 5% of the equipment price. Find the book value after 3 years using Sinking Fund Method (SFM)
where the interest rate is 5%.
____________7. A lathe machine costs 300 000php with a salvage value of 15000php is expected to last for 28
500 hours in a period of 5 years. In the first year of service it was used for 8000 hours. Compute the
depreciation for the book value at the end of the first year.
____________8. A 1000php, 6% bond pays semi-annually and will be redeemed at 110% after 3 years. If the
yield interest is 4% semi-annually. Find the Value of the Bond.
____________9. A businessman bought a new equipment for 100 000php other expenses including installation
amounted to 10 000php. At the end of its useful life of 10 years, the salvage value will be 10% of the first cost.
Using Straight Line Method (SLM), what is the book value after 5 years?
____________10. A Publishing Company bought a new Large Format Printer worth 250 000php, and
additional expenses of 5 000php for delivery and 3 500php for installation. It has an estimated economic life of
5 years and salvage value of 5% of the purchase price. Find the book value after 4 years using Sinking Fund
Method (SFM) where the interest rate is 5%.

DEPRECIATION

MIDTERM EXAM