(10) 1. Compute the present worth(at time zero) and the future worth (at time 16 years) of the cash flows shown below using an interest rate of 8% per year. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 A(from 0 to 5 and 10-15)=$ 1000.00 P4= $ 1500.00 P6= $ 1500.00 P7= $ 2000.00 P8= $2500.00 P9= $3000.00 P12= $ 1000.00 CE 406 Second Exam, Page Two 2. Solve the following problems, Show clearly all your work, in order to receive full point. (10) a). A company borrows $18,000 at an interest rate of a nominal 16% per year compounded quarterly. The company desires to repay the loan in 30 equal quarterly payments, with the first payment starting three months from now. i). What should be the size of each payment? ii). If after making 20th payments the company decides to pay off the balance of the loan at the start of the 21th quarter, how much must the company pay? "SHOW CLEARLY ALL YOUR WORK" CE 406 Second Exam, Page Three (10) b.. Determine the yearly economic factor given below using the appendix tables for the appropriate compounding period. a) The value of the (P/A, 20%, 6) factor compounded semiannually. b) The value of the (F/A, 6.5%, 8) factor compounded annually. c) The value of the (F/P, 16%, 10) factor compounded quarterly. "Show clearly all your work, in order to receive full point." CE 406 Second Exam, Page four (15) 3. Compare the alternates shown below on the basis of their capitalize costs, using interest rate of 10% per year. Alternative V Alternative W Initial Investment Annual Cost $120,000.00 $240,000.00 20,000.00 25,000.00 Salvage Value 10,000.00 5,000.00 Life, years 20 Permanent "SHOW CLEARLY ALL YOUR WORK" CE 406 Second Exam, Page Five (15) 4. Compare the machines below on the basis of their Present worth's, using an interest rate of 10% per year. MACHINE P MACHINE Q First Cost $49,000.00 Salvage Value 14,000.00 $83,000.00 15,000.00 Life, years 3 6 Annual Maintenance Cost 8,000.00 8,500.00 Overhaul every 2 years 9,700.00 7,000.00 Show All Work Clearly CE 406 Second Exam, Page Six (15) 5. Compare the machines below on the basis of their equivalent uniform annual worth's, using an interest rate of 8% per year. MACHINE P MACHINE Q First Cost $ 49,000.00 $ 83,000.00 Salvage Value Life, years 4 Annual Maintenance Cost 8,000.00 Overhaul every 3 years 9,700.00 14,000.00 15,000.00 8 8,500.00 7,000.00 Show All Work Clearly