Basics Of Engineering Economy 2nd Edition Leland T. Blank, Anthony Tarquin - Solutions

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4-3 For what value of n, based on a 31/2% interest rate, do these cash flows have a present value of 0?
4-2 The cash flows have a present value of 0. Compute the value of J, assuming a 10% interest rate.
4-1 For diagrams (a) to (c). compute the unknown values B.C. V, using the minimum number of compound interest factors.
4. Anne Scheiber's endowment was given to support scholarships and loans for women. Should universities allow donors to place constraints on money they give? What ethical boundaries are appropriate?
3. How does that rate compare with the overall performance of the stock market from 1944 to 1995?
2. Now get out the calculator and refer to an equation from Chapter 3. What was Anne Scheiber's actual average annual rate of return during the years she was investing? (Assume no added investment from her salary.)
1. Set aside your calculator and test your intuition for a minute. What annual rate of return do you suppose it would take to turn $5000 into $20 million in 51 years? 20%. 100%?
3-62 Jack deposited $500,000 into a bank for 6 months. At the end of that time, he withdrew the money and received $520,000. If the bank paid interest based on continuous compounding: (a) What was the effective annual interest rate? (b) What was the nominal annual interest rate?
3-61 A friend was left $50,000 by his uncle. He has decided to put it into a savings account for the next year or so. He finds there are varying inter- est rates at savings institutions: 43/8% compounded annually, 41/4% compounded quarterly, and 41/8% compounded continuously. He wishes to select
3-60 How long will it take for $10,000, invested at 5% per year, compounded continuously, to triple in value?
3.59 A forklift truck costs $29,000. A company agrees to purchase such a truck with the understanding that it will make a single payment for the balance due in 3 years. The vendor agrees to the deal and offers two different interest schedules. The first schedule uses an annual effective interest
3-58 The I've Been Moved Corporation receives a con stant flow of funds from its worldwide operations This money (in the form of checks) is continu- ously deposited in many banks with the goal of earning as much interest as possible for "IBM One billion dollars is deposited each month, and the
3-57 Bart wishes to tour the country with his friends. To do this, he is saving money for a bus. (a) How much money must Bart deposit in a savings account paying 8% nominal annual interest, com pounded continuously, in order to have $8000 in 41/2 years? (b) A friend offers to repay Bart $8000 in
3-56 Bank North advertises, "We pay 6.50%, compounded daily." Bank South says, "We pay 6.50%, com- pounded continuously." If you deposit $10,000 with Bank South for one year, how much additional inter- est will you receive?
3-55 If you want a 12% rate of return, continuously com- pounded, on a project that will yield $6000 at the end of 21/2 years, how much must you be willing to invest now? (Answer: $4444.80)
3-54 A department store charges 13/4% interest per month compounded continuously, on its customer's charge accounts. What is the nominal annual interest rate What is the effective interest rate? (Answers: 21% 23.4%)
3-53 A bank pays 10% nominal annual interest on special three-year certificates. What is the effective annual interest rate if interest is compounded (a) Every three months? (b) Daily? (c) Continuously?
3-52 Traffic at a certain intersection is 2000 cars per day A consultant has told the city that traffic is expected to grow at a continuous rate of 5% per year for the next 4 years. How much traffic will be expected a the end of 2 years?
3-51 Select the best of the following five alternatives. Assume the investment is for a period of 4 years and P = $10,000. A. 11.98% interest rate compounded continuously B. 12.00% interest rate compounded daily C. 12.01% interest rate compounded monthly D. 12.02% interest rate compounded quarterly
3-50 First Bank is sending alumni of universities an invi- tation to obtain a credit card, with the name of their university written on it, for a nominal 9.9% interest per year after 6 months of 0% interest. These inter- est rates apply to the outstanding debt if not paid by a specified date each
3-49 Jim Duggan made an investment of $10,000 in a savings account 10 years ago. This account paid inter- est of 51/2% for the first 4 years and 61/2% interest for the remaining 6 years. The interest charges were compounded quarterly. (a) How much is this investment worth now? (b) What is the
3-48 The treasurer of a firm noted that many invoices were received with the following terms of payment: "2%- 10 days, net 30 days." Thus, if he were to pay the bill within 10 days of its date, he could deduct 2%. On the other hand, if he did not promptly pay the bill, the full amount would be due
3-47 Mr. Sansome withdrew $1000 from a savings account and invested it in common stock. At the end of 5 years, he sold the stock and received a check for $1307. If Mr. Sansome had left his $1000 in the sav- ings account, he would have received an interest rate of 5%, compounded quarterly. Mr.
3-46 A bank is offering to sell 6 month certificates of deposit for $9500. At the end of 6 months, the bank will pay $10,000 to the certificate owner. Based on a 6-month interest period, compute the nominal annual interest rate and the effective annual interest rate.
3-45 A student bought a $75 used guitar and agreed to pay for it with a single $85 payment at the end of 6 months. Assuming semiannual (every 6 months) compounding, what is the nominal annual interest rate? What is the effective
3-44 At the Central Furniture Company, customers who buy on credit pay an effective annual interest rate of 16.1%, based on monthly compounding. What is the nominal annual interest rate that they pay?
3-43 A bank advertises it pays 7% annual interest, com- pounded daily, on savings accounts, provided the money is left in the account for 4 years. What is the effective annual interest rate?
3-42 What interest rate, compounded quarterly, is equivalent to a 9.31% effective interest rate?
3-41 A local store charges 11/2% each month on the unpaid balance for its charge account. What nominal annual interest rate is being charged? What is the effective interest rate?
3-40 If the nominal annual interest rate is 12% com- pounded quarterly, what is the effective annual interest rate?
3-39 A firm charges its credit customers 13/4% interest per month. What is the effective interest rate?
3-38 A thousand dollars is invested for 7 months at an interest rate of 1% per month. What is the nomi- nal interest rate? What is the effective interest rate? (Answers: 12%; 12.68%)
3-37 A sum of money Q will be received 6 years from now. At 5% annual interest, the present worth of Q is $60. At the same interest rate, what would be the value of Q in 10 years?
3-36 In 1990 Mrs. John Hay Whitney sold her painting by Renoir, Au Moulin de la Galette, depicting an:
3.35 The tabulated factors stop at n = 100. How can they be used to calculate (P/F. i, 150)? (P/F. i, 200)? 3-36 In 1990 Mrs. John Hay Whitney sold her painting by Renoir, Au Moulin de la Galette, depicting an?
3-34 The following cash flows are equivalent in value if the interest rate is i. Which one is more valuable if the interest rate is 2i? -00) (ii) 0-1-2-
3-33 The local bank offers to pay 5% interest on savings deposits. In a nearby town, the bank pays 1.25% per 3-month period (quarterly). A man who has $3000 to put in a savings account wonders whether the higher interest paid in the nearby town justifies driv- ing there to make the deposit.
3-32 Sally Stanford is buying a car that costs $12,000. She will pay $2000 immediately and the remaining $10,000 in four annual end-of-year principal pay- ments of $2500 each. In addition to the $2500, she must pay 15% interest on the unpaid balance of the loan each year. Prepare a cash flow table
3-31 One thousand dollars is borrowed for one year at an interest rate of 1% per month. If the same sum of money could be borrowed for the same period at an interest rate of 12% per year, how much could be saved in interest charges?
3-30 A sum of money invested at 2% per 6-month period (semiannually), will double in amount in approxi- mately how many years? (Answer: 1712 years)
3-29 What sum of money now is equivalent to $8250 two years later, if interest is 4% per 6-month period? (Answer: $7052)
3-28 The following series of payments will repay a present sum of $5000 at an 8% interest rate. Use single?
3-27 In 1995 an anonymous private collector purchased a painting by Picasso entitled Angel Fernandez de Soto for $29,152,000. The picture depicts Picasso's friend de Soto seated in a Barcelona cafe drinking absinthe. The painting was done in 1903 and was valued then at $600. If the painting was
3-26 (a) If $100 at Time "0" will be worth $110 a year later and was $90 a year ago, compute the inter- est rate for the past year and the interest rate next year. (b) Assume that $90 invested a year ago will return $110 a year from now. What is the annual interest rate in this situation?
3-25 How much must you invest now at 7.9% interest to accumulate $175,000 in 63 years?
3-23 Mohammed can get a certificate of deposit (CD) at his bank that will pay 3.7% annually for 10 years. If he places $5530 in this CD, how much will it be worth when it matures? (a) Use the formula. (b) Use the interest tables and interpolation. (c) Use a TVM calculator. Contributed by Paul R.
3-22 A savings account earns 8% interest. If $1000 is invested, how many years is it until each of the following amounts is on deposit? (a) $1360 (b) $2720 (c) $4316 (d) $6848
3-21 How long would it take to double your money if you invest it at 4% simple interest? At 4% compound interest?
3-20 Rita borrows $5000 from her parents. She repays them $6000. What is the interest rate if she pays the $6000 at the end of (a) Year 2? (b) Year 3? (c) Year 5?
3-19 An inheritance will be $20,000. The interest rate for the time value of money is 7%. How much is the inhanits 3-20 Rita borrows $5000 from her parents. She repays them $6000. What is the interest rate if she pays the $6000 at the end of (a) Year 2? (b) Year 3? (c) Year 5?
3-18 Suppose that $2000 is deposited in an account that earns 6% interest. How much is in the account (a) after 5 years? (b) after 10 years? (c) after 20 years? (d) after 50 years? (e) after 100 years?
3-17 Alvin's Uncle Arnold gave him $16,000 from sell- ing the old family farm. Alvin wants to start college and have $12,000 available to buy a used car when he graduates in 4 years. Alvin wants to buy a new com- puter, software, and peripherals now, and he earns 3% in his savings account. How much
3-16 We know that a certain piece of equipment will cost $150,000 in 5 years. How much must be deposited today using 10% interest to pay for it?
3-15 A man borrowed $750 from a bank. He agreed to repay the sum at the end of 3 years, together with the interest at 8% per year. How much will he owe the bank at the end of 3 years? (Answer: $945)
3-14 Solve the diagram for the unknown Q assuming a 10% interest rate.
3-13 A manufacturing company made an investment 10 years ago that is now worth $1,500,000. How much was the initial investment: (a) at a simple interest rate of 10% per year? (b) at an interest rate of 10% per year compounding annually?
3-12 Assume that you save I penny a day for 50 years, that you deposit it in the bank at the end of each month, and that there are 30.5 days per month (you save 30.5 cents each month). How much do you have after 50 years, if: (a) The bank does not pay any interest. (b) The bank pays 2% per month
3-11 A firm has borrowed $5,000,000 for 5 years at 10% per year compound interest. The firm will make no payments until the loan is due, when it will pay off the interest and principal in one lump sum. What is the total payment?
3-10 How long will it take for an investment to double at 4% per year compounding annually?
3-9 Magdalen, Miriam, and Mary June were asked to consider two different cash flows: $500 that they could receive today and $1000 that would be received?
3-8 Which is more valuable. $20,000 received now or $5000 per year for 4 years? Why?
3-7 In your own words explain the time value of money. From your own life (either now or in a situation that might occur in your future), provide an exam- ple in which the time value of money would be important.
3-6 How long will it take for an investment to double at a4% per year simple interest rate?
3-5 is A company invested $450,000 ten years ago in a new technology that is now worth $1,000,000. What rate of interest did the company earn on a simple interest basis?
3-4 At an interest rate of 10% per year, $100,000 today i equivalent to how much a year from now?
3-3 A $5000 loan was to be repaid with 8% simple annual interest. A total of $5350 was paid. How long had the loan been outstanding? Problems 3-4 to 3-6 contributed by Hamed Kashani, Saeid Sadri, and Baabak Ashuri, Georgia Institute of Technology
3-2 A woman borrowed $2000 and agreed to repay it at the end of 3 years, together with 10% simple interest per year. How much will she pay 3 years hence?
3-1 Explain the difference between simple and com- pound interest. Which is more common?
5. Does a company face any ethical considerations when it improves process efficiency resulting in lost labor hours for employees? Discuss and explain.
4. If one batch is produced per day, how often are the savings actually compounded?
3. If the first-year savings is considered to be a single end-of-year cash flow, and the entire $90,000 investment is considered to occur at time 0, what is the present value of the project? Assume an interest rate of 15%.
2. How many batches needed to be produced to break even on the initial $27,000 invest- ment? (Assume all batches improved the yield by 4.2%. Do not consider the time value of money.)
1. One year of production had a value of $240 million. What is the value of one batch of product?
The number of dollars that have been accumulated now from an investment of $1000 twenty-five years ago if the market interest rate was 5% per year and the inflation rate averaged 2% per year is closest to:a. $1640b. $3385c. $5430d. $5556
If the market interest rate is 12% per year and the inflation rate is 5% per year, the number of future dollars in year 7 that will be equivalent to $2000 now can be determined by the relation:a. F 2000(1 0.176)7b. F 2000/(1 0.176)7c. F 2000(1 0.120)7d. F 2000(1 0.198)
The cost of an F-150 pick-up truck was $29,350 three years ago. If the cost increased only by the inflation rate and the price today is $33,015, the inflation rate was closest to:a. 3%b. 4%c. 5%d. 6%
If the market interest rate is 16% per year when the inflation rate is 9% per year, the real interest rate is closest to:a. 6.4%b. 7.3%c. 9.4%d. 16.1%
If the market interest rate is less than the real interest rate, then:a. the inflated interest rate is higher than the real interest rate.b. the real interest rate is zero.c. a deflationary condition exists.d. an inflationary condition exists.
For a real interest rate of 12% per year and an inflation rate of 7% per year, the market interest rate per year is closest to:a. 4.7%b. 7%c. 12%d. 19.8%
When all future cash flows are expressed in constant-value dollars, the rate that should be used to find the present worth is the:a. real MARR.b. inflation rate.c. inflated interest rate.d. inflated MARR.
In wisely planning for your retirement, you invest$12,000 per year for 20 years into a 401(k) account.How much can you withdraw each year for 10 years, starting one year after your last deposit, if you obtain a real return of 10% per year?Assume the inflation rate averages 2.8% per year.
Maintenance costs for pollution control equipment on a pulverized coal cyclone furnace are expected to be $80,000 now and another $90,000 three years from now. The CFO of Monongahela Power wants to know the equivalent annual cost of the equipment in years 1 through 5. If the company uses a real
The costs associated with a small X-ray inspection system are $40,000 now and $24,000 per year, with a $6000 salvage value after 3 years. Determine the equivalent annual cost of the system if the real interest rate is 10% per year and the inflation rate is 4% per year.
A European-based cattle genetics engineering research lab is planning for a major expenditure on research equipment. The lab needs $5 million of today’s dollars so it can make the acquisition 4 years from now. The inflation rate is steady at 5% per year. (a) How many future dollars will be needed
Aquatech Microsystems spent $183,000 for a communications protocol to achieve interoperability among its utility systems. If the company uses a real interest rate of 15% per year on such investments and a recovery period of 5 years, what is the equivalent annual worth of the expenditure in
Veri-Trol, Inc. manufactures in-situ calibration verification systems that confirm flow measurement accuracies without removing the meters. The company is considering modifying the main assembly line with one of the enhancements shown below. If the company’s real MARR is 15% per year, which
An entrepreneur engaged in wildcat oil well drilling is seeking investors who will put up$500,000 for an opportunity to reap high returns, if the venture is successful. The prospectus states that a real return of at least 22% per year for 5 years is likely, but not promised. How much will the
The strategic plan of a solar energy company that manufactures high-efficiency solar cells includes an expansion of its physical plant in 4 years. The engineer in charge of planning estimates the expenditure required now to be $8 million, but in 4 years, the cost will be higher by an amount equal
A small mechanical consulting company is examining its future cash flow requirements. The president expects to replace office machines and IT equipment at various times over a 6-year planning period. Specifically, the company expects to spend $6000 two years from now, $9000 three years from now,
Well-managed companies set aside money to pay for emergencies that inevitably arise in the course of doing business. If a commercial solid waste recycling and disposal company puts 0.5% of its after-tax income into such an account, how much will the company have after 7 years, provided the
A pulp and paper company is planning to set aside$150,000 now for possibly replacing its large synchronous refiner motors. If the replacement isn’t needed for 5 years, how much will the company have in the account provided it earns a market rate of 10% per year and the inflation rate is 4% per
In a period of 4% per year inflation, how much will a machine cost 3 years from now in terms of constant-value dollars, if the cost today is $40,000 and the price increases such that the manufacturer will make a real rate of return of 5% per year over the 3 years?
An offshore services company is considering the purchase of equipment that has a cost today of$96,000. In a period of 5% per year inflation, how much will the equipment cost 3 years from now in terms of constant-value dollars? The manufacturer plans to raise the price exactly in accordance with the
Colgate-Palmolive can purchase a piece of equipment now for $80,000 or buy it 3 years from now for an estimated $128,000. The MARR requirement is a real return of 15% per year. If an inflation rate of 4% per year must be accounted for, should the company buy the machine now or later?
If you make an investment in an insurance policy that is guaranteed to pay you $1.8 million 20 years from now, provided you live that long, what will be the buying power of the money with respect to today’s dollars? The market interest rate is 8% per year and the inflation rate stays at 3.8% per
The cost of constructing a roundabout in a lowtraffic residential neighborhood five years ago was$625,000. A civil engineer designing another one that is almost exactly the same estimates the cost today will be $740,000. (a) If the cost had increased only by the inflation rate over the five years,
A Division of Dow Chemical wants to set aside money now so that it can purchase new air fin coolers three years from now. The total cost now is$45,000. The price of the coolers is expected to increase only by the inflation rate of 3.7% per year for each of the next three years. Dow earns interest
An engineer deposits $10,000 into an account when the market interest rate is 10% per year and the inflation rate is 5% per year. The account is left undisturbed for 5 years. (a) How much money will be in the account? (b) What will be the purchasing power in terms of today’s dollars?(c) What is
With hopes to retire at a decent age and move to Hawaii, an engineer plans to turn her investment account over to a professional management firm that promises to make a real return of 10% per year when the inflation rate is 4% per year. The account currently is valued at $422,000 and she wants to
A plant manager is not sure whether he will get the approval to buy new equipment for automating an engine assembly line now or at some future time within the next three years. In order to have the money whenever he is given the go-ahead, he has asked you to tell him what the equipment is likely to

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Basics Of Engineering Economy 2nd Edition Leland T. Blank, Anthony Tarquin - Solutions

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