HW-1: Suppose 3,000 TL you have borrowed has 10 percent interest, compounded sem
ID: 1097963 • Letter: H
Question
HW-1: Suppose 3,000 TL you have borrowed has 10 percent interest, compounded semiannually (i.e. 10 percent interest every six months). What is the total amount due after five years ?
HW-2: A parent annually deposits 500 TL into a child's savings account that earns 12 percent annual interest. Determine the amount available on the child's eighteenth birthday ?
HW-3: A company borrows one million TL for an improvement project. The loan is to be paid off over 12 years in equal monthly installments. The interest rate is 0.75% per month.Determine the monthly installment ?,Determine the balance remaining after five years of payments ?
HW-4: A company is considering an investment of $200,000 in new equipment that will provide income (revenues minus expenses) of $50,000 per year for five years. At the end of five years the equipment may be sold for $70,000. The company requires a MARR of 15% to undertake this project. Should it proceed?
HW-5: What happens, if the annual revenue and the salvage value falls short of the estimate by 10 percent? Calculate the future worth for the investment opportunity.Compute the annual worth of the investment
HW-6: A company is planning to purchase a new machine to produce a product. The engineer in charge of the project has determined the costs associated with the two final alternatives. The company will view positively investments with a MARR of 10%. Will these machines achieve that? Which is the better alternative?
Machine X
Machine Y
Investment cost
$55,000
$72,000
Economic life
5 years
6 years
Annual revenue
$22,500
$23,500
Annual costs
Labor
$ 6,200
$ 5,700
Electrical
$ 1,100
$ 1,200
Maintenance
$ 600
$ 650
Taxes, insurance
$ 600
$ 650
Total annual costs
$ 8,500
$ 8,200
Salvage value
$ 5,500
$ 7,000
HW-7: Determine the benefit-cost ratio.?
Machine X
Machine Y
Investment cost
$55,000
$72,000
Economic life
5 years
6 years
Annual revenue
$22,500
$23,500
Annual costs
Labor
$ 6,200
$ 5,700
Electrical
$ 1,100
$ 1,200
Maintenance
$ 600
$ 650
Taxes, insurance
$ 600
$ 650
Total annual costs
$ 8,500
$ 8,200
Salvage value
$ 5,500
$ 7,000
Explanation / Answer
Answer 2 Since the parents are deposition annually 500 upto 18 years
So the amount of interest ( presuming simple interest) received after 18 years on the amount deposited in 1st year
500 * 12% *18 = 1080
In the same way we will calculate the interest received after 18 years on the amount deposited in 2nd year, 3rd year, 4th year , 5th year and so on upto 18 years
Year Amount deposited (A) Interest received after 18 years (B)
1 500 1080 (500*12%*18)
2 500 1020 (500*12%*17)
3 500 960 (500*12%*16)
4 500 900 (500*12%*15)
5 500 840 (500*12%*14)
6 500 780 (500*12%*13)
7 500 720 (500*12%*12)
8 500 660 (500*12%*11)
9 500 600 (500*12%*10)
10 500 540 (500*12%*9)
11 500 480 (500*12%*8)
12 500 420 (500*12%*7)
13 500 360 (500*12%*6)
14 500 300 (500*12%*5)
15 500 240 (500*12%*4)
16 500 180 (500*12%*3)
17 500 120 (500*12%*2)
18 500 60 (500*12%*1)
Total 9000 10260
So amount received after 18 years = Total amount deposited in 18 years by parents (A) + Total amount of interest received in 18 years(B)
= 9000 +10260
= 19260
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