Sample FE Exam Problems

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, 5^th edition, by Blank and Tarquin.

It is recommended that you read through each question carefully.

1		A quick, rough estimate of the time required for money to double can be obtained by dividing which of the following numbers by the compound interest rate?
			A)	100
			B)	72
			C)	64
			D)	52
2		Items which are not easily expressed in terms of dollars are called:
			A)	Indirect costs
			B)	Variable costs
			C)	Intangible costs
			D)	Legal issues
3		Interest that is calculated using only the principal is called:
			A)	Simple interest
			B)	Effective interest
			C)	Add-on interest
			D)	Compound interest
4		If $1000 is borrowed at 10% per year simple interest, the total amount due at the end of five years is nearest to:
			A)	$1,100
			B)	$1,250
			C)	$1,500
			D)	$1,611
5		The amount of money five years ago that is equivalent to $1000 now at 10% per year compound interest is nearest to:
			A)	$621
			B)	$667
			C)	$1,500
			D)	$1,611
6		The symbol that represents a uniform cash flow in consecutive interest periods is:
			A)	F
			B)	P
			C)	G
			D)	A
7		Minimum attractive rate of return refers to:
			A)	The rate of return achievable from a safe government bond.
			B)	The rate of return that must be equaled or exceeded to render an investment attractive.
			C)	The rate of return guaranteed on a bank savings account.
			D)	The lowest rate of return required to attract foreign capital.
8		All of the following are examples of cash inflows except:
			A)	Income taxes
			B)	Asset salvage value
			C)	Operating cost reduction
			D)	Construction cost savings
9		All of the following are interest rates except:
			A)	Return on investment
			B)	MARR
			C)	Accrued interest
			D)	Rate of return
10		When the interest rate is 10% per year, all of the following are equivalent to $5,000 now except:
			A)	$4,545 one year ago.
			B)	$5,500 one year hence.
			C)	$4,021 two years ago.
			D)	$6,050 two years hence.