Engineering Economics MCQ Questions & Answers | Civil Engineering

Salvage value is the estimated residual value of an asset at the end of its useful life. It represents the amount that can be recovered by selling the asset after it is no longer usable for its intended purpose. This value is sometimes referred to as scrap value, which indicates the worth of the asset in its dismantled or recycled state. The other terms, such as going value, junk value, and second-hand value, may refer to different aspects of an asset's worth but do not specifically denote the residual value at the end of its useful life as accurately as the term "scrap value."

Explanation:

We can solve this problem using the future value formula for a series of deposits:

Future Value = P(1 + r)^n

Where:
P is the deposit amount
r is the annual interest rate
n is the number of years
In this case, Miss Calledo made three deposits:
P 1,000 at the end of the 2nd year
P 1,500 at the end of the 3rd year
P 2,000 at the end of the 4th year
Let's calculate the future value of each deposit separately and then add them up:

For the first deposit:
P1 = 1000 (the principal amount)
r = 10% (0.10 as a decimal)
n = 4 - 2 = 2 years
Future Value₁ = 1000 * (1 + 0.10)^2 = 1000 * (1.10)^2

For the second deposit:
P2 = 1500
n = 4 - 3 = 1 year
Future Value₂ = 1500 * (1 + 0.10)^1 = 1500 * (1.10)^1

For the third deposit:
P3 = 2000
n = 4 - 4 = 0 years
Future Value₃ = 2000 * (1 + 0.10)^0 = 2000 * 1

Now, add up the future values of all three deposits:
Total Future Value = Future Value1 + Future Value2 + Future Value3

Total Future Value = 1000 * (1.10)^2 + 1500 * (1.10)^1 + 2000 * 1

Total Future Value = 1210 + 1650 + 2000

Total Future Value = 4860

So, the amount in the account at the end of the 4th year is P 4,860.00. Therefore, the correct answer is Option C.