SITUATION1: Five hundred pesos (P500.00) is deposited monthly to an account earning 7% compounded monthly. (a) what is the amount of the deposit after five years? (b) if the monthly deposit after two years is increased to P1,000. What is the amount of the deposit after five years? (c) repeat question () if the interest is 18% compounded monthly? SITUATION2: Interpret the figure below: find (a) Present worth of all additional maintenance cost, (b) Present worth of all cost, (c) Equivalent uniform annual cost (EUAC). Note, EUAC is the sum of all expenses such as first cost, operation cost and other expenses. 0 1 2 3 4 5 6 7 8 9 10 11 12 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5.15 1.5 1.5 Initial cost: P20M Annual maintenance: P1.5M .*. 25 1,5 Additional Maintenance every 5 years: P3M Cost of money: 8.0% SITUATION3: Under the data collected from the office of Department of Transportation and DPWH over the last 5 years indicate that for each fatality, there are 40 non-fatal injury accidents ($1500 present cost each) and 300 property damage accidents ($2000 present cost each). What is the breakeven value of statistical re (VSL) needed to LIFE justify a highway project if i is 8%? The death rate on a particular three-lane road is 8 per 100 million vehicle-miles. Adding a lane would reduce this to 5 per million, and other accidents would cost $1.5M per mile to build, and annual maintenance would be 3% of the first cost. Assume that the lane would last 40 years. The road carries 10000 vehicle per day. Use reduction factor of 3/8 for all accidents. (Non-CE students no need to answer this item).
SITUATION1: Five hundred pesos (P500.00) is deposited monthly to an account earning 7% compounded monthly. (a) what is the amount of the deposit after five years? (b) if the monthly deposit after two years is increased to P1,000. What is the amount of the deposit after five years? (c) repeat question () if the interest is 18% compounded monthly? SITUATION2: Interpret the figure below: find (a) Present worth of all additional maintenance cost, (b) Present worth of all cost, (c) Equivalent uniform annual cost (EUAC). Note, EUAC is the sum of all expenses such as first cost, operation cost and other expenses. 0 1 2 3 4 5 6 7 8 9 10 11 12 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5.15 1.5 1.5 Initial cost: P20M Annual maintenance: P1.5M .*. 25 1,5 Additional Maintenance every 5 years: P3M Cost of money: 8.0% SITUATION3: Under the data collected from the office of Department of Transportation and DPWH over the last 5 years indicate that for each fatality, there are 40 non-fatal injury accidents ($1500 present cost each) and 300 property damage accidents ($2000 present cost each). What is the breakeven value of statistical re (VSL) needed to LIFE justify a highway project if i is 8%? The death rate on a particular three-lane road is 8 per 100 million vehicle-miles. Adding a lane would reduce this to 5 per million, and other accidents would cost $1.5M per mile to build, and annual maintenance would be 3% of the first cost. Assume that the lane would last 40 years. The road carries 10000 vehicle per day. Use reduction factor of 3/8 for all accidents. (Non-CE students no need to answer this item).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:INTEREST, ANNUITY, DEPRECIATION, BREAK-EVEN ANALYSIS
SITUATION1: Five hundred pesos (P500.00) is deposited monthly to an
account earning 7% compounded monthly. (a) what is the amount of the
deposit after five years? (b) if the monthly deposit after two years
is increased to P1,000. What is the amount of the deposit after five
years? (c) repeat question () if the interest is 18% compounded
monthly?
SITUATION2: Interpret the figure below: find (a) Present worth of all
additional maintenance cost, (b) Present worth of all cost, (c)
Equivalent uniform annual cost (EUAC). Note, EUAC is the sum of all
expenses such as first cost, operation cost and other expenses.
0 1 2 3 4 5 6 7 8 9 10 11 12
20
Y
1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5.15 1.5 1.5
Initial cost: P20M
Annual maintenance: P1.5M
***
25
1,5
Additional Maintenance every 5 years: P3M
Cost of money: 8.0%
SITUATION3: Under the data collected from the office of Department of
Transportation and DPWH over the last 5 years indicate that for each
fatality, there are 40 non-fatal injury accidents ($1500 present cost
each) and 300 property damage accidents ($2000 present cost each).
What is the breakeven value of statistical
(VSL) needed to
justify a highway project if i is 8%? The death rate on a particular
three-lane road is 8 per 100 million vehicle-miles. Adding a lane
would reduce this to 5 per million, and other accidents would cost
$1.5M per mile to build, and annual maintenance would be 3% of the
first cost. Assume that the lane would last 40 years. The road carries
10000 vehicle per day. Use reduction factor of 3/8 for all accidents.
(Non-CE students no need to answer this item).
Transcribed Image Text:Situation4: Calculate the benefit cost ratio for a highway project
with the following benefits and costs, The project life is 40 years,
the interest rate is 10%, and the project's right of way is worth $5M
in 40 years.
$20M-----Construction Cost (includes acquiring right of way)
$350K----Annual maintenance
------Repaving every 8 years.
$1M------Annual value of lives saved (1 per year)
$1.25M---Time savings for commercial traffic
$20
0.25 hours
250,000 trips
$3M-
hour
trip
year
$1M------Time savings for commuter and recreational traffic/year
$5
0.25 hours 800,000 trips
hour
trip
Hint: Benefit cost ratio = Annual
year
benefit costs/ Total cost
Situation5: A printing machine is bought at P1.5M and is estimated to
have salvage value of P100,000 after 500,000 copies. The annual cost
of renting the space for the business is P80,000, power cost per copy
is P1.50, and maintenance and paper cost per copy is P4.00. The
expected annual production of the machine is P100,000 copies. Annual
interest is 15%. Determine the production cost per copy.
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