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engineering economy
Basics Of Engineering Economy 3rd Edition Leland T. Blank, Anthony Tarquin - Solutions
10. 3.64 An engineer who is saving for retirement plans to deposit $500 every quarter into an investment portfolio, starting one quarter from now. The portfolio should return 6% per year compounded semiannually with no interperiod interest. The total at the end of 25 years is closest to:1. $119,400
9. 3.63 You have made quarterly deposits for 3 years into a REIT (Real Estate Investment Trust) fund that compounds interest at 1% per month.The value of n in the F/A factor that will determine F at the end of the 3-year period is:1. 3 2. 12 3. 36 4. None of these
8. 3.62 Attendance at the annual Northwest Livestock Show and Rodeo declined for the 5-year period from 2016 through 2020. The attendance was 25,880 in 2016, 22,000 in 2017, and 13,500 in 2020, a 15% per year decrease. The average ticket price was $10 per person over the 5-year period. The show
7. 3.61 Royalties paid to holders of mineral rights tend to decrease with time as resources become depleted. In one particular case, the rights holder received a royalty check of $18,000 six months after the lease was signed. She continued to receive checks at 6-month intervals, but the amount
6. 3.60 Nippon Iron & Steel invested $950,000 in a new shearing unit. At an interest rate of 12% per year compounded monthly, the monthly income required to recover the investment in 3 years is closest to:1. $31,550 2. $35,880 3. $39,370 4. $43,550
5. 3.59 Encon Environmental Testing needs to purchase $40,000 worth of equipment 2 years from now. At an interest rate of 12% per year compounded quarterly, the uniform quarterly worth of the equipment is closest to:1. $3958 2. $4189 3. $4341 4. $4500
4. 3.58 The multistate Powerball Lottery, worth $182 million, was won by a single individual who had purchased five tickets at $1 each. The individual was given two choices:Option 1: Receive 26 payments of $7 million each, with the first payment to be made now, with the rest to be made at the end
3. Page 1073.57 For an interest rate of 1% per quarter compounded continuously, the effective semiannual interest rate is closest to:1. 1.005%2. 2.0%3. 2.02%4. 2.20%
2. 3.56 An interest rate of 1.5% per month compounded continuously is closest to an effective rate of:1. 1.51% per quarter 2. 4.5% per quarter 3. 4.6% per quarter 4. 9% per 6 months
1. 3.55 An interest rate of 12% per year compounded monthly is nearest to:1. 12.08% per year 2. 12.28% per year 3. 12.48% per year 4. 12.68% per year
7. 3.54 A stock option is a device by which the buyer can buy or sell a stock at an agreed-upon price within a stated period of time. The time can be as short as 1 week and as long as 3 years. There is an upfront cost to purchase the option.When the stock for AT&T was selling for $32.50 per share,
6. 3.53 Two young couples (all about to turn 25 years old) are discussing how to enjoy life. Couple X believes the best way is to sacrifice early in life and retire at a young age. Couple Y believes that you can have fun early in life and still retire at a relatively young age. Both couples plan to
5. 3.52 If you deposit $1000 per month into an investment account that pays interest at a rate of 6% per year compounded quarterly, how much will be in your account at the end of 5 years? Assume no interperiod compounding.
4. 3.51 Treasury securities are issued and backed by the U.S. government and, therefore, are considered to be the lowest-risk securities on the market. As an investor looking for protection against inflation, you are considering the purchase of inflation-adjusted bonds known as U.S.Treasury
3. 3.50 Many college students have Visa credit cards that carry an interest rate of “Simple 24% per year” (i.e., 2% per month). When the balance on such a card is $5000, the minimum payment is $110.25.1. Page 106What is the amount of interest in the first payment?2. How long will it take in
2. 3.49 A wise mechanical engineering graduate began saving money for early retirement by depositing $1500 per month into a fixed rate account that pays 6% per year compounded semiannually. If she started saving 1 month after she started working, what is the expected value of the account at the end
1. 3.48 Julie has a low credit rating, plus she was furloughed from her job 2 months ago. She has a new job starting next week and expects a salary to start again in a couple of weeks. Since she is a little short on money to pay her rent, she decided to borrow $100 from a loan company, which will
5. 3.47 (a) How many monthly deposits of $750 would a company have to make to accumulate $150,000 if the interest rate is 10% per year compounded semiannually? Assume no interperiod compounding. (b) Is the answer the same if a spreadsheet is used instead of factors?
4. 3.46 Gentech Digital wants to have enough money in its capital investment account to replace a robot that is involved in the manufacture of circuit boards. How much would the company have to deposit every month in order to accumulate $280,000 in 5 years if the rate of return on the account is 8%
3. 3.45 Today, an engineer deposited $10,000 into an account that pays interest at 8% per year compounded semiannually. If there is no interperiod compounding and withdrawals of $1000 in months 2, 11, and 23 are already planned, what will be the future value at the end of 3 years?
2. 3.44 Income from recycling paper and cardboard at the U.S. Army’s Fort Benning Maneuver Center has averaged $3000 per month for 2½years. What is the future worth of the income (after the 2½ years) at an interest rate of 6% per year compounded quarterly? Assume there is no interperiod
1. 3.43 Julia will be setting aside 10% of her monthly paycheck for automatic investment in a stock mutual fund that pays dividends at 8%per year compounded semiannually. If the deposit is $1200 per month beginning 1 month from now, how much will she have after 25 years?Assume there is no
15. 3.42 Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $125,000 in year 1 and increase by 3% each year through year 5. What is the equivalent annual worth of the maintenance costs at an interest rate of 10% per year compounded semiannually?
14. 3.41 The cost to manufacture a firing system component used in a rapid deployment missile defense system was $23,000 the first year; however, the company expects the cost to increase by 2% each year. Calculate the present worth of this cost over a 5-year period at an interest rate of 10%per
13. 3.40 Fieldsaver Technologies, a manufacturer of precision laboratory equipment, borrowed $2 million to renovate one of its testing labs. The loan was repaid in 2 years through quarterly payments that increased by$50,000 each time. (a) At an interest rate of 12% per year compounded quarterly,
12. 3.39 Atlas Moving and Storage wants to have enough money to purchase a new tractor trailer in 4 years at a cost of $290,000. The company plans to set aside $4000 in month 1 and increase its set aside by a uniform amount each month. (a) Using factors, determine how much the monthly increase must
11. 3.38 Revenue from sales of hardened steel connectors was $50,000 in the first quarter, $51,000 in the second, and amounts increasing by$1000 per quarter through year 4. What is the equivalent uniform amount per quarter if the interest rate is 12% per year compounded quarterly?
10. 3.37 Metalfab Pump and Filter expects the cost of steel bodies for 6-inch valves to increase by $2 every 3 months. If the cost for the first quarter is expected to be $80, what is the present worth of the costs for a 3-year time period at a MARR of 12% per year compounded quarterly?Page 105
9. 3.36 McMillan Company manufactures electronic flow sensors that are designed as an alternative to ball-and-tube rotometers. The company recently spent $3 million to increase the capacity of an existing production line. If the extra revenue generated by the expansion amounts to $200,000 per
8. 3.35 You have a very good salary and a smart investment manager. She tells you that in only 6 years you can accumulate $688,530 from quarterly deposits of $20,000 into an account that has a historical return of 12% per year compounded quarterly. It seems like a “stiff”commitment, but one
7. 3.34 Corrosion problems and manufacturing defects in a Kinder-Morgan pipeline caused longitudinal weld seam failures, resulting in a pressure reduction to 80% of the design value. If the reduced pressure results in delivery of less product valued at $100,000 per month, what will be the future
6. 3.33 How much money must be invested each quarter if Adkef Technologies wants to accumulate $825,000 in 5 years in a fund that grows at a rate of 16% per year compounded continuously? Solve this problem using the factor formula and either the EXP or EFFECT function on a spreadsheet, or as
5. 3.32 Assume that Austin Water purchases surface water from the Lower Colorado River Authority at a cost of $120,000 per month in the months of February through September. Instead of paying monthly, the utility makes a single payment of $800,000 at the end of the year (i.e., end of December) for
4. 3.31 Radio Frequency Identification (RFID) is technology used by drivers with “speed passes” at toll booths and ranchers who track livestock from “farm-to-fork.” Walmart uses the technology to track products within its stores. If RFID-tagged products will result in better inventory
3. 3.30 Fort Bliss, a U.S. Army military base, contributed $3.3 million of the $87 million capital cost for a desalting plant constructed and operated by El Paso Water (EPW). In return, EPW agreed to sell water to Fort Bliss at $0.85 per thousand gallons for 20 years. If the Army base uses 200
2. 3.29 The West Gulf Maritime Association and Port Houston spent$500,000 on two simulators to give new crane operators experience in the cab of ship-to-shore cranes that unload massive containers. If the simulator gets new operators to more quickly meet the expected standard of moving 30 to 35
1. 3.28 How much will ASW Hydrotherm have to deposit into an investment account each month in order to accumulate $980,000 for production line expansion 3 years from now? The company’s MARR is 18% per year compounded monthly.
9. 3.27 A friend tells you she invested $10,000 in a cousin’s Harley-Davidson dealership in a Wyoming resort district that promises a return of 20% per year compounded continuously. (a) If the return is realized as promised, how much will her investment be worth 10 years from now? (b) Solve this
8. 3.26 Ellis Autotrol, Inc. plans to install an ecofriendly energy recovery system that will cost an estimated $86,900 if it is installed 5 years from now. The company uses an interest rate of 10% per year compounded continuously. (a) How much could it spend now? (b) Solve this problem using
7. 3.25 Deployment of hypersonic missiles is the U.S. strategy to counter advanced missile development by China and Russia. The development project was originally expected to have an equivalent present worth of$3.9 billion, but due to extra time needed to write computer code, delayed tests, and
6. 3.24 Pollution control equipment for a pulverized coal cyclone furnace is expected to cost $190,000 two years from now and another $120,000 four years from now. If Monongahela Power wants to set aside enough money now to cover these costs, how much must be invested at an interest rate of 9% per
5. 3.23 Soil Mediators, Inc., plans to finance a site reclamation project using xeriscape landscaping (meaning no irrigation; only rainfall) that will require a 4-year cleanup and planting period. If the company borrows $4.5 million now and expects a MARR of 16% per year compounded semiannually on
4. 3.22 An investment banker recommends that you place deposits of$5000 now and $7000 five years from now into an aggressive growth fund of international IT corporate stocks that is expected to return 8%per year compounded quarterly. If you do and it performs as expected, how much will you have
3. 3.21 Techten, Inc., which specializes in online security software development, wants to have $85 million available in 3 years to expand its East Coast campus. How much money must the company set aside now in an account that earns interest at a rate of 8% per year compounded quarterly?
2. 3.20 A present sum of $5000 at an interest rate of 8% per year compounded semiannually is equivalent to how much money 8 years ago?
1. 3.19 How much money could Midland Refining afford to spend 4 years from now in lieu of spending $400,000 now for upgrading its tank farm if the interest rate is 10% per year compounded semiannually? Use factors and a spreadsheet to find the F value.
18. 3.18 Identify the payment period and compounding period for the following situations:1. Deposits are made each quarter into an account reserved for purchasing new equipment 2 years from now. The interest rate on the deposits is 12% per year compounded monthly.2. Cash from sales at a small
17. 3.17 Two brothers each deposited $5000 per year for 10 years into different annuity plans. Abraham received an APY of 5%, while Mel, according to him, got a much higher rate at 5% due to continuous compounding. After 10 years, how much more did Mel have because of continuous compounding? Round
16. 3.16 Beth has a no-annual-fee Visa credit card that charges an APR of 12.5% per year. Interest is compounded monthly. If a payment is missed by even 1 day, the rate jumps to an APR of 24.5% for the remainder of the time she keeps the card or until the total debt is paid off. (This is not an
15. 3.15 Eckelberger Products, Inc. makes high-speed recorders with highspeed scanning. The small company has been growing at an average rate of 75% per year for the past 4 years. The CEO asked you to convert the past growth rate into a monthly rate for its annual report. If the past growth rate
14. 3.14 The Premier Car Title Loan Company makes emergency loans of up to $500 for 1 month for a fee of 4% of the loan amount. Your friend, Clare, is in a tight spot and borrows $500. What is (a) the amount of interest paid in 1 month; (b) the nominal interest rate per year; and (c)the effective
13. 3.13 Western Energy makes quarterly deposits into an account reserved for purchasing new equipment 2 years from now. The rate of return on the deposits is 12% per year compounded monthly. Calculate the effective annual rate of return, i.e., the APY.
12. 3.12 An interest rate of 21% per year compounded every 4 months is equivalent to what effective rate per year? Also, write the spreadsheet function.
11. 3.11 The owner of DIY Truck Accessories provides loans at purchase time with payments every 3 months. When pressed for the effective annual rate, the number 15.865% compounded quarterly was given. (a)Verify that the nominal annual rate is 15% as shown in Table 3.3. (b)Determine the effective
10. 3.10 The Second National Bank of Fullerton advertises an APR of 14%, but it indicates in the “small print” that compounding occurs on a monthly basis for personal loans with no collateral required. Determine the APY you would pay using (a) an equation, and (b) a spreadsheet function. (Note:
9. 3.9 Convert the given interest rates in the left-hand column into the APR rates listed in the right-hand column. Assume 4 weeks/month.Table Summary: Table divided into 2 columns summarizes requested interest rate for a list of five given rates of interest. The column headers are marked as: Given
8. 3.8 You were just informed of the interest rate on your student loan. It is stated as 0.50% per quarter. Determine the nominal interest rate r (a)per month; (b) per semiannual period; (c) per year; and (d) over a 2-year period.
7. 3.7 Identify the following interest rate statements as either nominal or effective: (a) APR of 1.5% per month compounded daily; (b) 17% per year compounded quarterly; (c) effective 15% per year compounded monthly; (d) nominal 0.6% per month compounded weekly; (e) 0.3%per week compounded weekly;
6. 3.6 Identify the compounding period for the following interest statements: (a) 2% per quarter; (b) 8% per year compounded semiannually; (c) 4.5% per year compounded monthly; (d) effective 3.5% per quarter compounded weekly; and (e) 1% per month compounded continuously.
5. 3.5 For an interest rate of 0.5% per 2 months, determine the number of times interest is compounded in (a) 2 months; (b) 2 semiannual periods;and (c) 3 years.
4. 3.4 Page 102Determine the number of times interest is compounded in 1 year for the following interest statements: (a) 1% per month; (b) 2% per quarter; (c) 8% per year compounded semiannually; and (d) 6% per year compounded continuously.
3. 3.3 Identify the compounding period in months associated with each of the following interest statements:1. 1% per month 2. 2.5% per quarter 3. 9.3% per year compounded semiannually 4. Nominal 7% per year compounded quarterly 5. Effective 6.8% per year compounded monthly 6. Effective 3.4% per
2. 3.2 Identify the following interest rate statements as either nominal or effective: (a) 1.3% per month; (b) 1% per week compounded weekly;(c) APR of 15% per year compounded monthly; (d) effective 1.5% per month compounded daily; (e) 15% per year compounded semiannually;( f ) 6.2% APY; (g) 3% per
1. 3.1 For an interest rate of 2% per quarter, determine the nominal interest rate per (a) semiannual period; (b) year; and (c) 2 years.
8. Make personal finance calculations and decisions involving nominal and effective rates for debt and investment circumstances.Personal finances
7. Use a spreadsheet to perform equivalency computations involving nominal and effective interest rates.Spreadsheets
6. Make equivalence calculations for payment periods shorter than the compounding period.Single and series: PP < CP
8. Make personal finance calculations and decisions involving nominal and effective rates for debt and investment circumstances.Personal finances
7. Use a spreadsheet to perform equivalency computations involving nominal and effective interest rates.Spreadsheets
6. Make equivalence calculations for payment periods shorter than the compounding period.Single and series: PP < CP
5. Make equivalence calculations when uniform or gradient series occur for payment periods equal to or longer than the compounding period.Series: PP ≥ CP
4. Make equivalence calculations for various payment periods and compounding periods when only single amounts occur.Single amounts: PP ≥ CP
3. Determine the correct i and n values for different payment and compounding periods.Compare PP and CP
2. Determine the effective interest rate for any time period.Effective interest rate
1. Understand nominal and effective interest rate statements.Nominal and effective
15. 2.124 At an interest rate of 8% per year, the future worth in year 15 of an investment plan that requires a deposit of $9000 now and amounts increasing by 8% per year through year 7, and nothing further, is closest to:1. $282,303 2. $465,376 3. $228,395 4. $609,328
14. 2.123 The present worth in year 0 of a lease that requires a payment of $9000 now and amounts increasing by 5% per year through year 10 at 8% per year interest is closest to:1. $73,652 2. $79,939 3. $86,330 4. $87,454
13. 2.122 If you are able to save $5000 in year 1, $5150 in year 2, and amounts increasing by 3% each year through year 20, the amount you will have at the end of year 20 at a 10% per year return is closest to:1. $60,810 2. $102,250 3. $351,500 4. $410,000
12. 2.121 Income from a precious metals mining operation has been decreasing uniformly for 5 years. If income in year 1 was $300,000 and it decreased by $30,000 per year through year 4, the equivalent annual worth of the income at 10% per year is closest to:1. $310,500 2. $258,600 3. $203,900 4.
11. 2.120 Sheryl is planning for her retirement now. She expects to save $5000 in year 1,$6000 in year 2, and amounts increasing by $1000 each year through year 20. If the investments earn 10% per year, the amount Sheryl will have at the end of year 20 is closest to:1. $242,568 2. $355,407 3.
10. 2.119 An investment of $75,000 in equipment that will reduce the time for machining and packaging self-locking fasteners will save $20,000 per year. At an interest rate of 10% per year, the number of Page 78years required to recover the initial investment is closest to:1. 9 years 2. 7 years 3.
9. 2.118 Charley, an engineer who believes in the “save now, play later” philosophy wanted to retire in 20 years with $1.5 million. At a 10% per year return on his investments, the amount he must invest each year (starting in year 1) to reach the $1.5 million goal is closest to:1. $26,190 2.
8. 2.117 An enthusiastic new engineering graduate plans to start a consulting firm by borrowing $100,000 at 10% per year interest. The loan payment each year to pay off the loan in 7 years is closest to:1. $18,745 2. $20,540 3. $22,960 4. $23,450
7. 2.116 The cost of lighting and maintaining a transmission and receiving antenna on top of a mountain in El Paso, Texas, is $90,000 per year. At an interest rate of 10% per year, the present worth of maintaining the antenna for 10 years is closest to:1. $1,015,000 2. $894,000 3. $712,000 4.
6. 2.115 A manufacturing company spent $30,000 on a new conveyor belt. If the conveyor belt resulted in cost savings of $4200 per year, the length of time it would take for the company to recover its investment at 8% per year is closest to:1. 7 to 8 years 2. 9 to 10 years 3. 11 to 12 years 4. 13 to
5. 2.114 The amount of money that you can spend now for a much safer car in lieu of spending $30,000 three years from now at an interest rate of 12% per year is closest to:1. $15,710 2. $17,805 3. $19,300 4. $21,355
4. 2.113 For the diagram shown, the respective values of n to calculate the present worth in year 0 by the equation P0 = 100(P/A,10%,n1)(P/F,10%,n2) are 1. n1 = 6 and n2 = 1 2. n1 = 6 and n2 = 2 3. n1 = 7 and n2 = 1 4. n1 = 7 and n2 = 2
3. 2.112 Summit Metals is planning to expand a local manufacturing operation 5 years from now at a cost of $100,000. If the company plans to deposit money into an account each year for 4 years beginning 2 years from now (i.e., first deposit is in year 2) to pay for the expansion, the equation that
2. 2.111 An arithmetic gradient has cash flow of $1000 in year 4, $1200 in year 5, and amounts increasing by $200 per year through year 10. If you use the factor 200(P/G, 10%,?) to find P in year 3, the value of n to use in the P/G factor is 1. 6 2. 7 3. 8 4. 9
1. 2.110 A single deposit made 30 years ago by your grandmother is worth $45,000 today.If the account earned interest at 10% per year, the amount she deposited was closest to:1. $2579 2. $3285 3. $4565 4. $8505
33. 2.109 McCarthy Construction is trying to bring the company-funded portion of its employee retirement fund into compliance with HB-301. The company has already deposited $500,000 in each of the last 5 years. Beginning in year 6, McCarthy will increase its deposits by 15% per year through year
32. 2.108 Union Pacific is considering the elimination of a railroad grade crossing by constructing a dual-track overpass. The railroad subcontracts for maintenance of its crossing gates at $11,500 per year, starting next year (year 1). However, beginning 4 years from now the costs are expected to
31. 2.107 Calculate the present worth of all costs for a newly acquired 3D printer with an initial cost of $29,000, a trade-in value of 8% of initial cost at the end of its 10-year life, and an annual operating cost of $13,000 for the first 4 years, increasing by 10% per year thereafter. Use an
30. 2.106 Find the future worth in year 10 of $50,000 in year 0 and amounts increasing by 15% per year through year 10 at an interest rate of 10% per year.
29. 2.105 A build-to-operate (BTO) company signed a contract to operate Alamosa County industrial wastewater treatments plants for the next 20 years. The contract will pay the company $2.5 million now and amounts increasing by $200,000 each year through year 20. At an interest rate of 10% per year,
28. 2.104 John and Mariam have owned a house in Virginia for the last 9 years. The series of their annual property tax expenses is shown below. If the same funds had been invested in the stock market, they would likely have earned at a rate of 10%per year. Calculate the equivalent annual amount in
27. 2.103 The Pedernales Electric Cooperative estimates that the present worth now of income from an investment in renewable energy sources is $12,475,000. There will be no income in years 1 and 2, but in year 3 income will be $250,000, and thereafter it will increase according to an arithmetic
26. 2.102 Silastic-LC-50 is a liquid silicon rubber designed to provide high clarity, superior mechanical properties, and short cycle time for high-speed manufacturers.One high-volume manufacturer used it to achieve smooth release from molds. The company’s projected growth will result in silicon
25. 2.101 A start-up company selling color-keyed carnauba car wax borrows $40,000 at an interest rate of 10% per year. In planning for the financial future of the company, the owner wishes to repay the loan over a 5-year period with annual payments such that the third through fifth payments are
24. 2.100 A low-cost noncontact temperature measuring tool may be able to identify railroad car wheels that are in need of repair long before a costly structural failure occurs. If the BNSF railroad saves $100,000 in years 1 through 5, $110,000 in year 6, and constant amounts increasing by $10,000
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