PE Exam Practice Problem #34: Water Resources | Engineering Economics - Present Worth Analysis

Welcome to SolvedIn6: Free practice problems for the Professional Engineering Exam! Each question is styled after those created by the NCEES, and is usually solved in under 6 minutes, which is the average time you will have to solve each question on the Professional Engineering Exam.
Today's problem is about Engineering Economics. The reference manual will be a big help here. Searching for "present worth" (the term that the problem asks us to use to solve the problem) will lead us to the equation we need in the "Engineering Economics" section. We need to recognize that we need "Uniform Series, Present Worth". From here, we can calculate the present worth of the loan repayment option offered by the bank in option 1. After that, we can back-calculate for the down payment required for option 2. The values for interest rate and compounding period will need to be adjusted.
If you would like more Water Resources practice problems, please check out the rest of the playlist which this video is part of.
Please note that newer versions of the reference manual may have been released since this video was recorded. The search terms are usually still correct, but the page numbers listed in the video will be different.