PRACTICE PROBLEMS PROBLEM A bond with a face value of $4,000 pays quarterly interest of 1 1/2 percent each period. Twenty-six interest payments remain before the bond matures. How much would you be willing to pay for this bond today, if the next interest payment is due now and you want to earn 8 percent compounded quarterly on your money? PROBLEM The following costs are associated with three tomato-peeling machines being considered for use in a food canning plan. Machine A $52,000 15,000 Machine B $67,000 12,000 Machine C $63,000 9,000 First cost Annual Maintenance & Operating costs Annual increase starting in year 2 Annual benefit Salvage value Useful life, in years 38,000 13,000 37,000 22.000 250 31,000 19,000 If the canning company uses a MARR of 12%, which is the best alternative? Show your analysis using each of the following methods: (a) Present worth (b) Annual equivalence (c) Rate of return PRACTICE PROBLEMS PROBLEM A bond with a face value of $4,000 pays quarterly interest of 1 1/2 percent each period. Twenty-six interest payments remain before the bond matures. How much would you be willing to pay for this bond today, if the next interest payment is due now and you want to earn 8 percent compounded quarterly on your money? PROBLEM The following costs are associated with three tomato-peeling machines being considered for use in a food canning plan. Machine A $52,000 15,000 Machine B $67,000 12,000 Machine C $63,000 9,000 First cost Annual Maintenance & Operating costs Annual increase starting in year 2 Annual benefit Salvage value Useful life, in years 38,000 13,000 37,000 22.000 250 31,000 19,000 If the canning company uses a MARR of 12%, which is the best alternative? Show your analysis using each of the following methods: (a) Present worth (b) Annual equivalence (c) Rate of return