ISE 102, MIDTERM 1 Practice EXAM Fall 2025
ISE102
Midterm 1 Practice Exam
1. An example for fixed input in economic decision making is that the project manager has a
budget of one million dollars for this project. [3 points]
True
False
Feedback: Since one million dollars is the input, it is fixed.
2. In an economic decision making, when the inputs and outputs are fixed, the criterion to use is
minimize the input. [3 points]
True
False
Feedback: The criterion should be to maximize the difference between the input and output
rather than maximizing the output or minimizing the input. (there was a typo in the question but
it may not change the answer)
3. The learning curve percentage is 80% if the learning curve exponent is given as -0.3214 [3
points]
True
False
Feedback: -0.3214 = log (learning curve expressed as a decimal) / log 2.0
Learning curve expressed as a decimal = 10^((log 2.0) * (-0.3214)) =0.80 or 80%
4. An opportunity cost is associated with using a resource in one activity instead of another. [3
points]
True
False
Feedback: The amount of resources used in one activity cannot be used in another activity.
5. If Sonja invested $10,000 in a good mutual fund that pays an average return of 10%, the
investment will be worth $16,110 five years from now. [3 points]
True
False
Feedback:
F = 10,000 (F/P, 10%, 5)
= 10,000 (1.611)
= $16,111
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, ISE 102, MIDTERM 1 Practice EXAM Fall 2025
6. Decision making in engineering economy is concerned with choosing the best __________.
[3 points]
alternative with the longest life.
alternative with the smallest cost.
alternative with the largest annual benefit
alternative that is the most cost-effective
7. Sam, a friend of Pam, made a similar investment of $20,000 at a much later date when she
turned 35. Now that she is also 40, what is her investment worth if his investment also an
earned an interest rate of 6.5% compounded semi-annually: [5 points]
$52,207.37
$44,491.96
$27,540
None of these
Feedback:
Since the number of semi-annual periods in 5 years is 10, F can be determined as below.
F = P (F/P, 3.25%, 10)
= 20,000 (1 + 0.0325) ^10
8. All of the following are examples of unethical practices in engineering economics except
which one? [3 points]
Using faulty or inaccurate data
Failing to bring attention to a potential safety problem in construction due to fear of
retribution
When weighing alternatives, using optimistic estimates for one alternative while
using pessimistic estimates for others
Identifying all feasible alternatives for a given project
9. Engineering economics can help answer all of the following questions except [3 points]
Which project/alternative is more economical?
How long will it take before I have $1,000,000 in my bank account?
Shall I lease or buy a backhoe for my construction company?
How can I maintain a high standard of on-the-job safety for my employees?
10. Alex deposited $500 in a bank account today. The banker said that Alex will have an 8%
interest rate. Which equation represents the amount of money he will have in 5 years? [5
points]
500 (A/F, 0.8, 5)
500 (F/P, 0.8, 5)
500 (F/P, 0.08, 5)
500 (P/F, 0.08, 5)
11. What is ia representing? [5 points]
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ISE102
Midterm 1 Practice Exam
1. An example for fixed input in economic decision making is that the project manager has a
budget of one million dollars for this project. [3 points]
True
False
Feedback: Since one million dollars is the input, it is fixed.
2. In an economic decision making, when the inputs and outputs are fixed, the criterion to use is
minimize the input. [3 points]
True
False
Feedback: The criterion should be to maximize the difference between the input and output
rather than maximizing the output or minimizing the input. (there was a typo in the question but
it may not change the answer)
3. The learning curve percentage is 80% if the learning curve exponent is given as -0.3214 [3
points]
True
False
Feedback: -0.3214 = log (learning curve expressed as a decimal) / log 2.0
Learning curve expressed as a decimal = 10^((log 2.0) * (-0.3214)) =0.80 or 80%
4. An opportunity cost is associated with using a resource in one activity instead of another. [3
points]
True
False
Feedback: The amount of resources used in one activity cannot be used in another activity.
5. If Sonja invested $10,000 in a good mutual fund that pays an average return of 10%, the
investment will be worth $16,110 five years from now. [3 points]
True
False
Feedback:
F = 10,000 (F/P, 10%, 5)
= 10,000 (1.611)
= $16,111
This study source was downloaded by 100000820853758 from CourseHero.com on 12-03-2025 05:55:36 GMT -06:00
Page, 1 of 5
https://www.coursehero.com/file/251905280/Midterm-1-ISE-102-Fall-2025-Practice-exam-with-Answerspdf/
, ISE 102, MIDTERM 1 Practice EXAM Fall 2025
6. Decision making in engineering economy is concerned with choosing the best __________.
[3 points]
alternative with the longest life.
alternative with the smallest cost.
alternative with the largest annual benefit
alternative that is the most cost-effective
7. Sam, a friend of Pam, made a similar investment of $20,000 at a much later date when she
turned 35. Now that she is also 40, what is her investment worth if his investment also an
earned an interest rate of 6.5% compounded semi-annually: [5 points]
$52,207.37
$44,491.96
$27,540
None of these
Feedback:
Since the number of semi-annual periods in 5 years is 10, F can be determined as below.
F = P (F/P, 3.25%, 10)
= 20,000 (1 + 0.0325) ^10
8. All of the following are examples of unethical practices in engineering economics except
which one? [3 points]
Using faulty or inaccurate data
Failing to bring attention to a potential safety problem in construction due to fear of
retribution
When weighing alternatives, using optimistic estimates for one alternative while
using pessimistic estimates for others
Identifying all feasible alternatives for a given project
9. Engineering economics can help answer all of the following questions except [3 points]
Which project/alternative is more economical?
How long will it take before I have $1,000,000 in my bank account?
Shall I lease or buy a backhoe for my construction company?
How can I maintain a high standard of on-the-job safety for my employees?
10. Alex deposited $500 in a bank account today. The banker said that Alex will have an 8%
interest rate. Which equation represents the amount of money he will have in 5 years? [5
points]
500 (A/F, 0.8, 5)
500 (F/P, 0.8, 5)
500 (F/P, 0.08, 5)
500 (P/F, 0.08, 5)
11. What is ia representing? [5 points]
This study source was downloaded by 100000820853758 from CourseHero.com on 12-03-2025 05:55:36 GMT -06:00
Page, 2 of 5
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