Arab Academy for Science & Technology & Maritime Transport

College of Engineering & Technology

Department of Construction and Building Engineering
CB311 Introduction to Construction Management
1st Semester 2018/2019 Dr. El Badr Osman

Assignment # 4
Question 1

1) What is meant by the term “Time Value of Money”?

2) Why all project Life cycle costs are considered when performing economic feasibility of a project?

Question 2

In which of the following situations, engineering economics analysis should be performed?

a) Changing design specifications for an item

b) Buying new equipment that will be used for 5 years in a construction site

c) Deciding on the paint color for the walls

d) Building a new factory

e) Deciding when to replace old equipment with new equipment of the same type

Question 3

1) A commercial building consists of 15 stores has the following sequence of cashes:

to the architect for preparing the design

construction duration is 5 months

nning of construction 10 stores are sold for LE 300,000 each

Draw the cash flow diagram for the project.

2) A contractor offers to purchase your old tractor dozer for LE 100000 but he cannot pay you the
money for 12 month. If you feel i= 1% per month is a fair interest rate.

a. What is the present worth to you today of the LE 100000 if it is paid 12 months from now?

b. What annual effective interest rate is involved?

Page 1 of 2
Arab Academy for Science & Technology & Maritime Transport
College of Engineering & Technology
Department of Construction and Building Engineering
CB311 Introduction to Construction Management
1stSemmester 2017/2018 Dr. El Badr Osman

3) A real estate company wants to start a new residential building. The initial cost is 300000LE, the
construction costs are 2000,000 LE, and 1,500,00 LE at 1st and 2nd year respectively. The company has
only 3400,000 LE now and wants to know if this amount is sufficient to finance the project. Make the
necessary calculation with interest rate =10%.

4) You are a structural consultant; a client offers you to choice between (a) LE 100000 now and (b) a
share in the project which you are fairly certain you can cash in for LE 150000 five years from now.
With i=10%, which is the most profitable choice.

5) Consider the cash flow diagram given below with the appropriate interest rates indicated. Determine
the present worth and future worth for the cash flow series.

6) The following two cash flow diagrams are equivalent at an interest rate of 12% compounded
annually. Determine the unknown C

Page 2 of 2