ECOR3800/Winter 2023 Assignment #1 Page 1/3 Carleton University Department of Civil and Environmental Engineering
ECOR 3800 A: Engineering Economics
Assignment #1 Due on: January 26
th
, 2023 INSTRUCTIONS:
1.
Clearly put a square around your final answers. 2.
Unless otherwise stated, answer all questions by hand (not typed) and submit. 3.
To submit, scan your assignment and upload it as a pdf to the Brightspace submission form. 4.
Show all of your work. No marks will be given without intermediate steps. 5.
Make sure your work is neat and that the scans are legible. Marks will be deducted for neatness 6.
Late assignments submitted within 24 hours of the deadline will be deducted 25%, assignments submitted past 24 hours will not be accepted 1.
(8 Marks) Suppose you deposit $1,360 in a bank savings account that pays interest at a rate of 11% per year. Assume that you don’t withdraw the interest earne
d at the end of each compounding period (year). a)
How much would you have at the end of year 5 with simple interest? b)
How much would you have at the end of year 5 with compound interest? 2.
(12 Marks) If you accumulated $935 on your credit card. You completely forgot to pay off your credit card since you do not use it often. The nominal interest rate on the credit card is 18%. How much would you have to pay after 18 months if the interest is compounded: a)
Annually b)
Semi-Annually c)
Quarterly d)
Monthly e)
Weekly f)
Daily 3.
(7 Marks) Mark decided to start a small car wash business. To get started, he purchased the main equipment for a total of $3,200. Each year, he usually collects $1,600 in revenue from car washes. He also needs to refill the detergents every year, this usually costs him about $370 per year. In his third year, one of his equipment broke down and he had to get it fixed for $420. After 7 years, he decided to discontinue his car wash business because he wanted to travel. He was able to sell his equipment online for $350. Draw the net cashflow diagram for Mark’s 7-year business.
