Site MapHelpFeedbackSample FE Exam Problems
Sample FE Exam Problems
(See related pages)

How to use this section: This section includes questions and problems like those on a typical FE exam. For organization purposes only, they are presented in chapter order of the text Engineering Economy, 6th edition, by Blank and Tarquin.

It is recommended that you read through each question carefully.

1
The construction cost of a permanent park is $600,000. Annual maintenance and operation costs are $120,000 per year. At an interest rate of 10% per year, the capitalized cost of the park is nearest to:
A)$600,000
B)$720,000
C)$1,200,000
D)$1,800,000
2
At an interest rate of 10% per year, the capitalized cost of an expenditure of $1,000 per year is nearest to:
A)$1,000
B)$2,000
C)$10,000
D)$12,000
3
Income from a certain operation is expected to be zero in years one through five, after which it will be $50,000 per year forever. The capitalized cost of the income at 10% per year is nearest to:
A)$252,300
B)$282,250
C)$310,450
D)$500,000
4
Expenses for water treatment at a state park are expected to be $60,000 now, $25,000 in year one, and $10,000 per year thereafter forever. At an interest rate of 8% per year, the capitalized cost of the treatment is nearest to:
A)$198,890
B)$200,150
C)$217,320
D)$254,160
5
An expenditure for maintaining a bridge occurs in five-year cycles. If the cost is $100,000 now and $100,000 every five years forever, the capitalized cost of this expenditure at 10% per year is nearest to:
A)$16,380
B)$163,800
C)$263,800
D)$305,800
6
Problems 6 through 8 are based on the following statement:

The data for new and used machines are shown below:

Used machineNew machine
Initial cost($)15,00040,000
Annual operating cost ($/year)8,0002,000
Salvage value ($)5,00010,000
Life (years)36

Use an interest rate of 10% per year.

The present worth of the new machine is closest to:

A)$43,630
B)$43,066
C)$45,210
D)$49,660
7
To compare the machines on the basis of a present worth analysis, the present worth values to use are:
A)PWused = $31,139, PWnew = $43,066
B)PWused =$31,139, PWnew = $37,461
C)PWused = $54,533, PWnew = $43,066
D)PWused = $54,533, PWnew = $37,461
8
The capitalized cost of the used machine is nearest to:
A)$12,521
B)$110,210
C)$125,210
D)$179,610
9
The cost of a small flood control dam is expected to be $40,000 now, $3,000 one year from now, $4,000 two years from now and amounts increasing by $1,000 per year through year ten, after which they will remain constant. At an interest rate of 10% per year, the capitalized cost of the dam is nearest to:
A)$81,325
B)$127,585
C)$147,761
D)$206,351
10
A machine that has a five year life has a first cost of $50,000, an operating cost of $4,000 per month and a $10,000 salvage value. At an interest rate of 12% per year compounded monthly, the capitalized cost of the machine is nearest to:
A)$17,303
B)$144,188
C)$297,100
D)$498,800
11
For an 8%, $10,000 bond with interest payable quarterly, the amount and frequency of the interest payments is:
A)$800 paid one time per year
B)$800 paid every 3 months
C)$200 paid every 4 months
D)$200 paid every 3 months
12
Interest payments on a bond are $300 every six months. If the face value of the bond is $10,000, the bond interest rate is:
A)3% per year
B)3% per year compounded semiannually
C)6% per year compounded semiannually
D)12% per year compounded quarterly
13
Interest payments on a certain bond are $500 every three months. If the bond interest rate is 10% per year compounded quarterly, the bond face value is:
A)$5,000
B)$10,000
C)$15,000
D)$20,000
14
A 6%, $10,000 bond has interest payable annually. The bond will mature 10 years from now. At what market interest rate will the present worth of the bond be $10,000?
A)At an interest rate less than 6% per year
B)6% per year
C)6% per year compounded semiannually
D)At an interest rate greater than 7% per year
15
A $10,000 municipal bond has an interest rate of 6% per year, compounded semiannually. The bond will mature in 10 years. If the market interest rate is 8% per year compounded semiannually, a person purchasing the bond should be willing to pay:
A)$10,000
B)An amount less than $10,000
C)An amount greater than $10,000
D)The amount cannot be determined from the information that is provided
16
A $25,000 bond has interest payable at 4% per year compounded quarterly. The bond will mature in ten years. At a market interest rate of 8% per year compounded quarterly, the present worth of the bond is closest to:
A)$14,235
B)$18,161
C)$20,963
D)$23,610
17
A $50,000 bond has a maturity date of six years from now. The bond interest rate is 6% per year payable semiannually. At a market interest rate of 4% per year payable semiannually, the present worth of the bond is closest to:
A)$41,695
B)$44,291
C)$52,341
D)$55,288

Problems 18 and 19 are based on the following statement:

18

A 9%, $10,000 bond with interest payable semiannually was issued three years ago. The bond's maturity date is 10 years after issue. The interest rate in the marketplace is 12% per year compounded semiannually.

The amount of interest the bond-holder will receive every six months is:

A)$450
B)$600
C)$900
D)$1200
19
The present worth of the bond is closest to:
A)$8,279
B)$8,606
C)$9,245
D)$11,675





To learn more about the book this website supports, please visit its Information Center.
(c)2005 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Notice.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.


BlankOnline Learning Center

Home > Chapter 5 > Multiple Choice Quiz