FE Civil Engineering Economics practice problems
6 free FE Civil Engineering Economics practice problems with answers and full worked solutions. Engineering Economics carries 5–8 of the 110 questions on the FE Civil exam (NCEES specification effective July 2020). Pick an answer to check it, then read the worked solution and why each wrong choice is wrong.
6 worked Engineering Economics problems
Question 1 of 6
$30,000 is invested at 8% per year compounded annually. Its value after 8 years is most nearly:
Show the answer and the reasoning
Why D
Given: P = $30,000, i = 8% compounded annually, n = 8 years. Relation: F = P(F/P, i, n) = P(1 + i)^n. Substitute: F = 30,000(1 + 0.08)^8 = 30,000(1.8509). Result: F = $55,528.
Why A is tempting
Discounted backwards instead of compounding forwards.
Why B is tempting
Added the rate times the years to the principal as a dollar amount.
Why C is tempting
Applied simple interest. Compounding earns interest on previously earned interest.
Source NCEES FE Reference Handbook 10.6 — Engineering Economics, interest factor tables
Question 2 of 6
Total cost is $85,000 at 3,250 units and $270,000 at 8,250 units. The variable cost per unit is most nearly:
Show the answer and the reasoning
Why D
Given: $85,000 at 3,250 units; $270,000 at 8,250 units. Relation: v = (C2 - C1)/(Q2 - Q1); the fixed cost cancels in the difference. Substitute: v = 185,000/5,000. Result: v = $37.00 per unit.
Why A is tempting
Computed the average cost at the lower volume, which still carries fixed cost.
Why B is tempting
Combined the totals rather than differencing them.
Why C is tempting
Computed the average cost at the higher volume.
Source NCEES FE Reference Handbook 10.6 — Engineering Economics, interest factor tables
Question 3 of 6
Fixed costs are $160,000 per year. Each unit sells for $106 and costs $46 in variable cost. The break-even quantity is most nearly:
Show the answer and the reasoning
Why C
Given: F = $160,000 per year, price $106, variable cost $46 per unit. Relation: Q = F/(price - variable cost); each unit contributes the difference toward fixed cost. Substitute: Q = 160,000/(106 - 46) = 160,000/60. Result: Q = 2667 units.
Why A is tempting
Added the variable cost to the price rather than subtracting it.
Why B is tempting
Divided by the selling price alone. Each unit only contributes price minus variable cost toward the fixed cost.
Why D is tempting
Divided by the variable cost.
Source NCEES FE Reference Handbook 10.6 — Engineering Economics, interest factor tables
Question 4 of 6
A structure faces a 5.0% annual probability of a flood causing $1,800,000 in damage. The expected annual loss is most nearly:
Show the answer and the reasoning
Why B
Given: annual probability 0.05, damage $1,800,000. Relation: expected annual loss = probability x consequence. Substitute: E = 0.05(1,800,000). Result: E = $90,000 per year.
Why A is tempting
Reported a monthly figure where the annual one was asked for.
Why C is tempting
Used the probability of at least one occurrence in ten years, not the annual probability.
Why D is tempting
Reported the full loss rather than its probability-weighted value.
Source NCEES FE Reference Handbook 10.6 — Engineering Economics, interest factor tables
Question 5 of 6
A payment of $180,000 will be received in 20 years. At 4% interest, its present worth is most nearly:
Show the answer and the reasoning
Why B
Given: F = $180,000 in n = 20 years, i = 4%. Relation: P = F(P/F, i, n) = F/(1 + i)^n. Substitute: P = 180,000/(1 + 0.04)^20 = 180,000(0.4564). Result: P = $82,150.
Why A is tempting
Discounted for one period too many.
Why C is tempting
Discounted with simple interest.
Why D is tempting
Compounded forwards. Bringing a future amount back to today means dividing.
Source NCEES FE Reference Handbook 10.6 — Engineering Economics, interest factor tables
Question 6 of 6
A product sells for $85 per unit with variable costs of $70 per unit. At 5,500 units sold, the total contribution margin is most nearly:
Show the answer and the reasoning
Why A
Given: price $85, variable cost $70 per unit, 5,500 units sold. Relation: contribution = (price - variable cost) x quantity, what is left to cover fixed cost and profit. Substitute: contribution = (85 - 70)(5,500). Result: contribution = $82,500.
Why B is tempting
Reported total variable cost.
Why C is tempting
Reported total revenue. The contribution margin subtracts the variable cost of producing each unit.
Why D is tempting
Added the variable cost rather than subtracting it.
Source NCEES FE Reference Handbook 10.6 — Engineering Economics, interest factor tables
Going further
Frequently asked questions
How many Engineering Economics questions are on the FE Civil exam?
Between 5 and 8 of the 110 questions, according to the NCEES FE Civil specification effective July 2020.
Are these real NCEES exam questions?
No. NCEES does not release its exam questions. These are original FE-style problems written to the NCEES specification and the FE Reference Handbook; every calculated key is checked by two independent solution methods.
Are these Engineering Economics practice problems free?
Yes. All 6 problems on this page, with answers and full worked solutions, are free and need no account.
Check where you stand, free
The quick diagnostic is eight FE Civil questions in about ten minutes, with no account. The free mock is a full 110-question, 5 hour 20 minute FE Civil paper with a worked solution for every question.