Civil Engineering May 2021 Review Innovations Engineering Economy 2

Inflation
1. A P2,000 in 2 years has an average inflation rate of 9. A property is purchased at P 100,000 with a 16. A dump truck was bought for P30,000 six years
6% and the real interest rate of money is 10%. salvage value of 10% of the original cost after 8 ago. It will have a salvage value of P3,000 four
Determine the inflation-adjusted interest rate. years of service. If during the first 4 years of service years from now. It is sold now for P8,000. What is
2. A company invests P10,000.00 today to be repaid it produces 100 units per year and 80 units each its sunk cost (a cost that can be recovered due to
in 5 years in one lump sum at 12% compounded year for the remaining years. What will be the book certain reason) if the depreciation method used is
annually. If the rate of inflation is 3% compounded value after 5 years of service using service output sinking fund at 6%?
annually, how much profit is relieved over 5 years? method?
17. The capitalized cost of a piece of equipment was
3. If the cost of money is 9% and the inflation rate is 10. A machinery worth P10,000 has an anticipated
found to be P142,000. The rate of interest used in
5%, what interest rate will take care of the cost of salvage value of P3,000 at the end of 7 years’
the in the computations was 12%, with a salvage
money and inflation? depreciable life. Compute the depreciation of the
value of P10,000 at the end of a service life of eight
machinery on the 4th year only using MACRS
years. Assuming that the cost of perpetual
method.
replacement remains constant, determine the
Depreciation
11. An equipment worth P5,000 has an anticipated original cost of the equipment.
4. A 30 hp sand mill cost P410,000. Salvage value of salvage value of P5,000 at the end of 5 years’
the mill is estimated to be P60,000 after 20 years. depreciable life. Compute the depreciation of the Situation - A machine is purchased at P10200 with
Find the appraisal or book value of the sand mill equipment on the 3rd year only using MACRS an expected salvage value of P1,200 at the end of
using straight line depreciation method after 10 method. its economic life of 8 years. If money is worth 6%
years. per annum, determine the book value of the
12. A cement mixer costs P45,000 with an estimated
5. A dump truck was bought for P300,000 six years machine at the end of 4 years using;
life of 5 years. Its salvage value is P2,500. Find its
ago. It will have a salvage value of P30,000 four yearly depreciation charge using sinking fund 18. Straight line method;
years from now. Determine the present value of method at 8.5%.
the dump truck if the depreciation method used is 19. SOYD method;
sinking fund at 6%? 13. A coin making machine costing P200,000 has a
salvage value of P20,000 at the end of its economic 20. Matheson’s method;
6. An asset is purchased for P9,000. Its estimated life life of five years. The schedule of production is as 21. DDB method; and
is 10 years, after which it will be sold for P1,000. follows:
Find the book value at the end of third year if sum- Year No. of coins Year No. of Coins 22. MACRS method
of-the-year’s digit method ( SOYDM) depreciation 1 100,000 4 40,000 23. Sinking Fund method.
is used. 2 80,000 5 20,000
7. RI purchased new 3D projectors with a total 3 60,000
worth of P618,000. If the equipment is depreciated Determine the annual reserve for depreciation for
over an eight-year period with salvage value of the 2nd year only
5%, determine the depreciation charge during the 14. A machine costing P280,000 has a useful life of
fifth year using declining balance method. 20000 hours at the end of which its salvage value is
8. In the previous problem, determine the P30,000. In the first year, it was used for 2080
depreciation charge during the fifth year using hours, in the second year, 3160 hrs. Find the book
double declining balance method. value at the end of the second year.
15. A machine has a first cost of P73500 and a salvage
value of P3500 at the end of its useful life of 8 years.
Evaluate the depreciation of the machine at during
the 5th year using the Matheson’s method.

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Civil Engineering May 2021 Review Innovations Engineering Economy 2

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Civil Engineering May 2021 Review Innovations Engineering Economy 2

For half year convention with n 10yrs:

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