FE Civil Engineering Economics

Knowledge area 3 of the FE Civil exam: 5–8 of the 110 questions. The subtopics NCEES lists, how they are tested and worked practice problems with solutions.

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110 questions on the real 5 hours 20 minutes clock, weighted to the NCEES specifications, with a score by knowledge area and a worked solution for every answer.

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What the specification lists

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

From the NCEES FE Civil CBT exam specifications, knowledge area 3.

Line drawing of a cash-flow timeline with up and down arrows, a stack of coins and a calculator

How Engineering Economics is tested

Engineering economics is the most formula-driven topic on the exam and one of the fastest to score: present worth, annual worth, future worth, rate of return, break-even and benefit-cost. The Reference Handbook gives the factor formulas and interest tables; practice converting a cash-flow description into P, F, A and G quickly.

On exam day the relationships you need are in the Reference Handbook section on Engineering Economics. The handbook is the only reference allowed, so practice finding each formula in it rather than memorizing a separate sheet.

Start the free Engineering Economics drill

FE Civil Engineering Economics practice problems

Work each problem with your calculator and the handbook, then open the solution.

Problem 1 · Time value of money

Two mutually exclusive alternatives each have an 8-year life and no salvage value. Alternative A costs $40,000 and returns $11,000 per year; its rate of return is about 21.8%. Alternative B costs $60,000 and returns $15,500 per year; its rate of return is about 19.7%. The MARR is 12% per year. Which alternative should be selected?

  1. A.Alternative B, because the incremental rate of return on the extra $20,000 is about 15.3%, which exceeds the MARR
  2. B.Alternative A, because its rate of return is higher than B's
  3. C.Neither alternative, because the incremental rate of return is lower than both alternatives' own rates of return
  4. D.Alternative A, because the incremental rate of return of B over A is lower than A's own rate of return
Show the answer and solution

Answer: A: Alternative B, because the incremental rate of return on the extra $20,000 is about 15.3%, which exceeds the MARR

The increment B − A costs $20,000 and returns $4,500 per year, so (P/A, i, 8) = 4.444, giving i ≈ 15.3% > 12%; the extra investment is justified and B is selected. Present worth confirms it: PW_A = −40,000 + 11,000(4.9676) = $14,644 and PW_B = −60,000 + 15,500(4.9676) = $16,998 at 12%.

Time value of money · Reference Handbook: Engineering Economics

Problem 2 · Cost types and breakdowns

Select all that apply.

A precast concrete plant is classifying its costs. Which of the following are variable costs that change in proportion to the number of panels produced? Select all that apply.

  1. A.Cement and aggregate used in each panel
  2. B.The plant manager's annual salary
  3. C.Annual property insurance on the plant
  4. D.Steam and electricity used to cure each casting
  5. E.Straight-line depreciation on the casting beds
  6. F.Piece-rate wages paid per panel finished
Show the answer and solution

Answer: A: Cement and aggregate used in each panel; D: Steam and electricity used to cure each casting; F: Piece-rate wages paid per panel finished

Variable costs rise and fall with production volume: materials, curing energy per casting, and piece-rate labor. Fixed costs such as salaries, insurance, and time-based depreciation are incurred regardless of how many panels are made.

Cost types and breakdowns · Reference Handbook: Engineering Economics

Problem 3 · Economic analyses

A plant that makes cast valve bodies has fixed costs of $480,000 per year and a variable cost of $35 per unit. Each unit sells for $59. The break-even production volume is most nearly:

  1. A.5,106 units/yr
  2. B.8,136 units/yr
  3. C.13,714 units/yr
  4. D.20,000 units/yr
Show the answer and solution

Answer: D: 20,000 units/yr

At break-even, revenue equals total cost: 59Q = 480,000 + 35Q, so Q = 480,000/(59 − 35) = 480,000/24 = 20,000 units per year. Each unit contributes $24 toward fixed cost, not $59.

Economic analyses · Reference Handbook: Engineering Economics

Problem 4 · Uncertainty

A contractor estimates that a fixed-price job has a 0.20 probability of earning a $150,000 profit, a 0.50 probability of earning a $60,000 profit, and a 0.30 probability of a $40,000 loss. The expected profit is most nearly:

  1. A.$48,000
  2. B.$56,700
  3. C.$60,000
  4. D.$72,000
Show the answer and solution

Answer: A: $48,000

E[profit] = 0.20(150,000) + 0.50(60,000) + 0.30(−40,000) = 30,000 + 30,000 − 12,000 = $48,000. The loss must enter with a negative sign, and each outcome must be weighted by its probability.

Uncertainty · Reference Handbook: Engineering Economics

More FE Civil practice problems from every knowledge area

Sit the full exam under the real clock

Take a full timed FE Civil practice exam

110 questions on the real 5 hours 20 minutes clock, weighted to the NCEES specifications, with a score by knowledge area and a worked solution for every answer.

Or start the free Engineering Economics drill

Common questions

How many Engineering Economics questions are on the FE Civil exam?

The NCEES FE Civil specification lists 5–8 questions on Engineering Economics, out of 110. Every examinee gets the same number per knowledge area.

What does Engineering Economics cover on the FE Civil exam?

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

Where are the Engineering Economics formulas on exam day?

In the NCEES FE Reference Handbook, which appears on screen during the exam: the Engineering Economics section. Practice with your free copy from MyNCEES so you know where each relationship sits.

Original independent practice questions written to the published NCEES exam specifications. Not affiliated with or endorsed by NCEES (National Council of Examiners for Engineering and Surveying).