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		The equation that is used to calculate a present worth from a single future amount is:
			A)	P = F (1 + i )n
			B)	P = F [1 / (1 + i )n ]
			C)	P = F [1 / (1 + i )n ]- 1) / i((1 + i )n ) ]
			D)	P = F [(1 + i )n ]- 1) / i]
2		Cash flow which changes by the same amount each interest period is called a:
			A)	Uniform cash flow.
			B)	Geometric series.
			C)	Uniform gradient.
			D)	Series cash flow.
3		The operating cost of a small machine is $800 in year one, $900 in year two, $1000 in year three, increasing by $100 per year through year ten. At an interest rate of 8% per year, the equivalent annual worth of the machine is nearest to:
			A)	$1,187
			B)	$2,598
			C)	$1,149
			D)	$7,966
4		A young couple wishing to save money for their child's first year in college purchases an insurance policy that will yield $10,000 fifteen years from now. The cost of the policy is $500 per year for 15 years, beginning one year from now. The rate of return on their investment is nearest to:
			A)	3%
			B)	4%
			C)	5 %
			D)	6%
5		The length of time required for money to quadruple in value at an interest rate of 6% per year is nearest to:
			A)	12 years
			B)	18 years
			C)	24 years
			D)	30 years
6		An engineer planning to purchase a new $38,000 pickup truck wants to have ½ of the cost of the truck as a down payment before purchasing it. She wants to buy the truck five years from now and plans to begin saving by depositing $2000 into a savings account one year from now, and then increasing the deposit each year by a uniform amount. If the account earns interest at 6% per year, the amount she must increase her deposit each year is nearest to:
			A)	$3,065
			B)	$6,130
			C)	$7,682
			D)	$14,198
7		Problems 7 through 10 are based on the following statement: A cash flow sequence is described by 1000 + 50k, where k is in years. The sequence extends from year one through year eleven. The interest rate is 8% per year. The value of G is:
			A)	$50
			B)	$100
			C)	$1000
			D)	$1050
8		The cash flow amount in year five is:
			A)	$250
			B)	$1,200
			C)	$1,250
			D)	$1,300
9		The present worth of the cash flow is nearest to:
			A)	$1,513
			B)	$8,344
			C)	$8,652
			D)	$9,009
10		The equivalent uniform annual worth through year eleven is nearest to:
			A)	$541
			B)	$1,169
			C)	$1,262
			D)	$1,351
11		A deposit of $10,000 now at 10% per year interest will accumulate to how much twenty years from now?
			A)	$30,000
			B)	$46,275
			C)	$67,275
			D)	$83,195
12		By doing annual updating of a certain production line, a manufacturing company can avoid spending $100,000 for a new system ten years from now. At an interest rate of 10% per year, the annual amount the company could afford to spend beginning one year from now is nearest to:
			A)	$6,270
			B)	$16,270
			C)	$24,190
			D)	$38,550
13		At an interest rate of 10% per year, annual deposits of $1,000 in years one through ten would accumulate to how much immediately after the last deposit?
			A)	$6,145
			B)	$15,937
			C)	$19,062
			D)	$22,819
14		If a company wanted to make a single investment now instead of spending $20,000 five years from now, how much would the investment be at an interest rate of 10% per year?
			A)	$3,276
			B)	$5,276
			C)	$12,418
			D)	$32,300
15		If a company invests $25,000 in new packaging equipment, by how much must it reduce its annual costs if it expects to recover the investment in seven years at an interest rate of 10% per year?
			A)	$2,635
			B)	$5,135
			C)	$12,830
			D)	$48,718
16		In order to update a production process, a company can spend money now or four years from now. If the amount now would be $20,000, what equivalent amount could the company spend four years from now at an interest rate of 10% per year?
			A)	$29,282
			B)	$35,620
			C)	$47,690
			D)	$63,380
17		If a small company invests its annual profits of $150,000 in a stock fund which earns 18% per year, the amount in the fund after ten years will be nearest to:
			A)	$479,000
			B)	$785,000
			C)	$2,153,000
			D)	$3,528,000
18		What is the equivalent amount in year ten of an expenditure of $5,000 in year one, $6,000 in year two, and amounts increasing by $1,000 per year through year ten? Assume the interest rate is 10% per year.
			A)	$30,723
			B)	$53,614
			C)	$92,169
			D)	$139,060
19		A short-haul trucking company purchased a used dump truck for $12,000. The company paid $5,000 down and financed the balance at an interest rate of 10% per year for five years. The amount of its annual payment is nearest to:
			A)	$1,447
			B)	$1,846
			C)	$3,166
			D)	$4,346
20		In order to have money for their son's college education, a young couple started a savings plan into which they made intermittent deposits. They started the account with a deposit of $2,000 (in year zero) and then added $3,000 in years two, five and six. The amount they had in the account in year ten if they earned interest at 12% per year was nearest to:
			A)	$15,170
			B)	$17,320
			C)	$20,913
			D)	$23,647