ISE 307 Engineering Economic Analysis Quiz 1

1. Define the following terms:

   End of period convention

   Earning power

   Purchasing power

   Economic equivalence

    

2. Saudi Ceramics has been contracted to provide SABIC with 15x15 cm floor ceramic tiles for their new office buildings. The contract requires the first delivery of ceramics be made after two years from now with a price of 5,000,000 riyals and the second delivery be made after three years from the first delivery with a price of SR 7,000,000. Saudi Ceramics would like to compare this new project with their investment account that pays 5% interest rate annually. What is the equivalent annual uniform payment received during the same period as the contract?

Summer Term 2008
Industrial and Systems Engineering Dr Muhammad Al-Salamah