ENGINEERING ECONOMY 2023-2024

Homework/Assignment 1
Full Name of submitter: Student ID:
Your Group number is: ……..
Title of your Group project is: ……..

Note:
1. Name the file: 2324EE_HW1_G[group#]
Group#: are as per the number you have registered as guided in the file “Semester
Project Requirement” and be finalized by lecturer.
2. Present the answer in a clean and respectful manner. Continue using this form to
complete your works and submit PDF on Blackboard.
3. Only 1 member in group submits (it is not necessary to be the leader to sumit).
4. Due date is defined in detail at each “ASSIGNMENT INFORMATION” from
Blackboard. Maximum score of late submission is two third of “Point Possible”
5. If you cannot submit on Blackboard: Email your work to TA, and CC to your Lecturer,
attached also the screenshot of your Blackboard showing error in that transaction.
Email of Lecturer: tvly@hcmiu.edu.vn
Email of TA: thuyduongphamm91@gmail.com

Textbook (16th Edition) – 8 exercises. Provide detailed formula, calculation & explanation.
4-2. What is the future equivalent of $1,000 invested at 6% simple interest per year for 3½
years? (4.24.8)
Solutions:
The interest earned would be:
I =(P)*(N)*(i)
=($1,000)*(3.5)*(6%)
= $210
The total amout repaid at the end of 3 years: $1000+$210=$1210

4.9. Suppose you contribute $10 per week ($520 per year) into an interest-bearing account that
earns 6% a year (compounded once per year). That’s probably one less pizza per week! But if you
contribute faithfully each week into this account, how much money would you have saved through the
compounding of interest by the end of 15 years? (4.6)
Solutions:
A= $520
i= 6%
 ENGINEERING ECONOMY 2023-2024

N=15 years
F=?
Solutions:
Money would you have saved through the compounding of interest by the end of 15 years is
(1+i ) N −1
F= A .[ ]
i
( 1+6 % )15−1
F=$ 520 .[ ]
6%
F= $12103.5

4.10. A lump-sum loan of $5,000 is needed by Chandra to pay for college expenses. She has
obtained small consumer loans with 12% interest per year in the past to help pay for college. But her
father has advised Chandra to apply for a PLUS student loan charging only 8.5% interest per year. If the
loan will be repaid in full in five years, what is the difference in total interest accumulated by these two
types of student loans?
For small consumer loans with 12% interest per year in the past to help pay for college:
N
F=P . (1+i )

5
F=$ 500 0. ( 1+12 % )
F= $8811.708
The interest she need to pay after 5 years is: $8811.708- $5,000 = $3811.70
For a PLUS student loan charging only 8.5% interest per year, the money she need to pay after 5
years is :
N
F=P . (1+i )

5
F=$ 5000. ( 1+8.5 % )
F= $7518.28
The interest she need to pay after 5 years is: $7518.28- $5,000 = $2518.28
The difference in total interest accumulated by these two types of student loans is: $1293.42

4.12 A 12-cylinder heavy-duty diesel engine will have a guaranteed residual value of $1,000 in 5
years. Today (year 0) the equivalent worth of this engine is how much if the interest rate is 9% per year?
(4.6)
 ENGINEERING ECONOMY 2023-2024

The equivalent worth of this engine is

−N
P=F . (1+i )

−5
P=$ 1000 . ( 1+9 % )

P=$ 649.93

4.13 You just inherited $10,000. While you plan to squander some of it away, how much should
you deposit in an account earning 5% interest per year if you’d like to have $10,000 in the account in 10
years? (4.6)
F=$10,000
i =5%
P=?
Solutions:
Thedeposit in an account earning 5% interest per year if you’d like to have $10,000 in the
account in 10 years is
−N
P=F . (1+i )

−10
P=$ 10 , 0 00. ( 1+ 5 % )

P=$ 6139.13
4.24 The Dominion Freight Company has invested $50,000 in a new sorting machine that is
expected to produce a return of $7,500 per year for the next 10 years. At a 7% annual interest rate, is
this investment worthwhile? (4.7)
A=$7,500
N=10 years
i= 7%
With a return of $7,500 per year for the next 10 years, The future sum of money they can get
( 1+i )N −1
P= A . [ N
]
i . ( 1+ i )
(1+7 % )10−1
P=$ 7500 .[ 10
]
7 % . ( 1+ 7 % )
P= $52676.86 > $50,000
 This investment is worthwhile

4.30 Luis wants to have $2,000,000 in net worth when he retires. To achieve this goal, he plans
to invest $10,000 each year (starting one year from now) into an account that earns 10% interest
 ENGINEERING ECONOMY 2023-2024

compounded annually. The amount of time before Luis can retire as a multimillionaire is how many
years? (4.7)
F= $2,000,000
A= $10,000
i =10%
N=?
Solutions
The amount of time before Luis can retire as a multimillionaire is how many years is
(1+i ) N −1
F= A .[ ]
i
(1+10 % ) N −1
$ 2,000,000=$ 10,000 .[ ]
10 %

 N=31.9~32 years