FE Other Disciplines Engineering Economics

Knowledge area 7 of the FE Other Disciplines exam: 6–9 of the 110 questions. The subtopics NCEES lists, how they are tested and worked practice problems with solutions.

Take a full timed FE Other Disciplines 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

What the specification lists

  • Time value of money (e.g., present worth, annual worth, future worth, rate of return)
  • Cost analysis (e.g., incremental, average, sunk, estimating)
  • Economic analyses (e.g., break-even, benefit-cost, optimal economic life)
  • Uncertainty (e.g., expected value and risk)
  • Project selection (e.g., comparison of projects with unequal lives, lease/buy/make, depreciation, discounted cash flow, decision trees)

From the NCEES FE Other Disciplines CBT exam specifications, knowledge area 7.

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 Other Disciplines Engineering Economics practice problems

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

Problem 1 · Time value of money

A plant's energy cost is $15,000 at the end of year 1 and is expected to escalate 5% per year for a total of 10 years. At an interest rate of 8% per year, the present worth of the energy costs is most nearly:

  1. A.$100,651
  2. B.$122,753
  3. C.$127,953
  4. D.$188,668
Show the answer and solution

Answer: B: $122,753

For a geometric gradient with g ≠ i, P = A1[1 − ((1 + g)/(1 + i))^n]/(i − g) = 15,000[1 − (1.05/1.08)^10]/0.03 = 15,000(8.1835) = $122,753. Discounting at i − g is only an approximation and overstates the value here.

Time value of money · Reference Handbook: Engineering Economics

Problem 2 · 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

Problem 3 · Cost types and breakdowns

A fabrication shop's total cost to produce 2,000 brackets per month is $86,000. Raising output to 2,500 brackets per month increases total cost to $101,000. The incremental cost per bracket for the additional 500 brackets is most nearly:

  1. A.$30.00
  2. B.$40.40
  3. C.$43.00
  4. D.$50.50
Show the answer and solution

Answer: A: $30.00

Incremental cost = Δcost/Δquantity = (101,000 − 86,000)/(2,500 − 2,000) = 15,000/500 = $30.00 per bracket. Average cost includes fixed costs spread over all units, so it is higher than the cost of the added units.

Cost types and breakdowns · Reference Handbook: Engineering Economics

Problem 4 · 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

More FE Other Disciplines practice problems from every knowledge area

Sit the full exam under the real clock

Take a full timed FE Other Disciplines 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 Other Disciplines exam?

The NCEES FE Other Disciplines specification lists 6–9 questions on Engineering Economics, out of 110. Every examinee gets the same number per knowledge area.

What does Engineering Economics cover on the FE Other Disciplines exam?

Time value of money (e.g., present worth, annual worth, future worth, rate of return); Cost analysis (e.g., incremental, average, sunk, estimating); Economic analyses (e.g., break-even, benefit-cost, optimal economic life); Uncertainty (e.g., expected value and risk); Project selection (e.g., comparison of projects with unequal lives, lease/buy/make, depreciation, discounted cash flow, decision trees).

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).