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CTC485 FE Review
Engineering Economics (v1.0)
4/26/2022 1 6

These problems address topics from the NCEES FE Civil CBT Exam Specifications
at https://ncees.org/wp-content/uploads/FE-Civil-CBT-specs-1.pdf, see below.

FE Civil Review 2022

Engineering Economics
NCEES Fundamentals of Engineering (FE)
CIVIL CBT Exam Specifications

Effective Beginning with the July 2020 Examinations

Knowledge Number of Questions

3. Engineering Economics 5–8

A. Time value of money (e.g., equivalence, present worth, equivalent annual
worth, future worth, rate of return)
B. Cost (e.g., fixed, variable, direct and indirect labor, incremental, average, sunk)
C. Analyses (e.g., break-even, benefit-cost, life cycle, sustainability, renewable
energy)
D. Uncertainty (e.g., expected value and risk)

Notes
V1.0 published 4/26/2022

Copyright © Mark Mattson, PE 2022

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CTC485 FE Review
Engineering Economics (v1.0)
4/26/2022 2 6

A. Time value of money

A new engineer decides to invest $6000 each year into a retirement savings account. The engineer
continues this practice for a 30-year period and earns on average 10% per year. The amount at the end of 30
years is most nearly:

A. $200,000

B. $990,000

C. $1,620,000

D. $3,140,000

A. Time value of money

A new engineer has a goal of investing enough money into a retirement to account to have the
equivalent of $1,000,000 in today’s dollars at retirement in 30 years. Assume a rate of return on the
investment of 10% per year and average inflation of 2.0% per year, the amount that should be invested
annually is most nearly:

A. $7,000

B. $9,000

C. $11,000

D. $13,000

Copyright © Mark Mattson, PE 2022

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CTC485 FE Review
Engineering Economics (v1.0)
4/26/2022 3 6

B. Cost

A piece of equipment will have an initial cost of $125,000 to purchase. It is assumed that
maintenance costs will begin at a base level of $2000 in the first year, increase to $2500 in year two, and
continue to increase at $500 each year through year 10. The equipment will have a salvage value of $12,000
after 10 years. Using an interest rate of 8%, the present worth of the equipment cost is most nearly:

A. $138,000

B. $142,000

C. $146,000

D. $157,000

B. Cost

Interest on a loan is 8% per year compounded each month. The effective annualized interest rate
is most nearly:

A. 8%

B. 8.1%

C. 8.3%

D. 8.7%

Copyright © Mark Mattson, PE 2022

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CTC485 FE Review
Engineering Economics (v1.0)
4/26/2022 4 6

B. Cost

A piece of equipment with an initial cost of $120,000 is expected to have a salvage value of
$15,000 after its 5-year service life is depreciated using the straight-line method. The equipment’s book value
at the end of year three is most nearly:

A. $52,000

B. $55,000

C. $57,000

D. $60,000

B. Cost

A piece of equipment with an initial cost of $120,000 is expected to have a salvage value of
$15,000 after its 5-year service life is depreciated using the MACRS method. The depreciation charge for year
three is most nearly:

A. $20,000

B. $21,000

C. $23,000

D. $24,000

Copyright © Mark Mattson, PE 2022

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CTC485 FE Review
Engineering Economics (v1.0)
4/26/2022 5 6

C. Analyses

A solar project is expected to have an initial cost of $2 million, with an annual operations and
maintenance cost of $50,000. Profits for the project have been estimated at $250,000 per year over a 25-year
lifespan. Using an interest rate of 8% per year, the benefit to cost ratio for this project is most nearly:

A. 0.95

B. 1.00

C. 1.05

D. 1.10

C. Analyses

Two alternatives are being considered for procuring a part. An interest rate of 8% will be used for
each alternative. These alternatives are presented as follows:

Method A involves purchasing equipment at an initial cost of $100,000, with a 5-year equipment life, $5,000
equipment salvage value, and an operating cost of $15,000 per year. In addition, each part will cost $18 to
make.
Method B involves purchasing parts from a supplier for $32 per part.

The number of parts required per year for the two methods to break even is most nearly:

A. 2800

B. 2950

C. 3100

D. 3250

Copyright © Mark Mattson, PE 2022

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CTC485 FE Review
Engineering Economics (v1.0)
4/26/2022 6 6

D. Uncertainty

Four levels of quality are being considered for equipment to produce a part. The initial cost and
repair cost and probability of equipment failure in any given year is presented in the table below. If this
equipment must be used for 10 years and an interest rate of 6% is used, the most economical option is most
likely:

Option Initial Cost Repair Cost Probability of needing a

major repair in any year
A $50,000 $30,000 40%
B $75,000 $35,000 25%
C $85,000 $45,000 15%
D $98,000 $50,000 5%
A. Option A

B. Option B

C. Option C

D. Option D

Copyright © Mark Mattson, PE 2022