ISYE 220

Home Work Assignment-1

Due Date: 09/09/2015

Points: 10

1. Identify the four engineering economy symbols and their values from the
following problem statement. Use a question mark with the symbol whose
value is to be determined.
Thompson Mechanical Products is planning to set aside $150,000 now for
possibly replacing its large synchronous refiner motors whenever it becomes
necessary. If the replacement is not needed for 7 years, how much will the
company have in its investment set-aside account, provided it achieves a rate
of return of 11% per year?
2. Construct a cash flow diagram for the following cash flows: $25,000
outflow at time 0, $9000 per year inflow in years 1 through 5 at an interest
rate of 10% per year, and an unknown future amount in year 5.
3. A solid waste disposal company borrowed money at 10% per year interest to
purchase new haulers and other equipment needed at the company owned
landfill site. If the company got the loan 2 years ago and paid it off with a
single payment of $4,600,000, what was the principal amount P of the loan?