Expenses for water treatment at a state park are expected to be $60,000 now, $25

Question

Expenses for water treatment at a state park are expected to be $60,000 now, $25,000 in year one, and $10,000 per year thereafter forever. At an interest rate of 8% per year, the capitalized cost of the treatment is nearest to Select one: A. $198,890 B. $200,150 C. $217,320 D. $254,160

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Interest payments on a certain bond are $500 every three months. If the bond interest rate is 10% per year compounded quarterly, the bond face value is Select one: A. $5,000 B. $10,000 C. $15,000 D. $20,000

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A $25,000 bond has interest payable at 4% per year compounded quarterly. The bond will mature in ten years. At a market interest rate of 8% per year compounded quarterly, the present worth of the bond is closest to Select one: A. $14,235 B. $18,161 C. $20,963 D. $23,610 Expenses for water treatment at a state park are expected to be $60,000 now, $25,000 in year one, and $10,000 per year thereafter forever. At an interest rate of 8% per year, the capitalized cost of the treatment is nearest to Select one: A. $198,890 B. $200,150 C. $217,320 D. $254,160 Expenses for water treatment at a state park are expected to be $60,000 now, $25,000 in year one, and $10,000 per year thereafter forever. At an interest rate of 8% per year, the capitalized cost of the treatment is nearest to Select one: A. $198,890 B. $200,150 C. $217,320 D. $254,160 Expenses for water treatment at a state park are expected to be $60,000 now, $25,000 in year one, and $10,000 per year thereafter forever. At an interest rate of 8% per year, the capitalized cost of the treatment is nearest to Select one: A. $198,890 B. $200,150 C. $217,320 D. $254,160 Expenses for water treatment at a state park are expected to be $60,000 now, $25,000 in year one, and $10,000 per year thereafter forever. At an interest rate of 8% per year, the capitalized cost of the treatment is nearest to Select one: A. $198,890 B. $200,150 C. $217,320 D. $254,160 Select one: A. $198,890 B. $200,150 C. $217,320 D. $254,160 A. $198,890 B. $200,150 C. $217,320 D. $254,160

Question 2

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Interest payments on a certain bond are $500 every three months. If the bond interest rate is 10% per year compounded quarterly, the bond face value is Select one: A. $5,000 B. $10,000 C. $15,000 D. $20,000

Question 2

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Interest payments on a certain bond are $500 every three months. If the bond interest rate is 10% per year compounded quarterly, the bond face value is Select one: A. $5,000 B. $10,000 C. $15,000 D. $20,000

Question text

Interest payments on a certain bond are $500 every three months. If the bond interest rate is 10% per year compounded quarterly, the bond face value is Select one: A. $5,000 B. $10,000 C. $15,000 D. $20,000 Interest payments on a certain bond are $500 every three months. If the bond interest rate is 10% per year compounded quarterly, the bond face value is Select one: A. $5,000 B. $10,000 C. $15,000 D. $20,000 Select one: A. $5,000 B. $10,000 C. $15,000 D. $20,000 A. $5,000 B. $10,000 C. $15,000 D. $20,000

Question 3

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A $25,000 bond has interest payable at 4% per year compounded quarterly. The bond will mature in ten years. At a market interest rate of 8% per year compounded quarterly, the present worth of the bond is closest to Select one: A. $14,235 B. $18,161 C. $20,963 D. $23,610

Question 3

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A $25,000 bond has interest payable at 4% per year compounded quarterly. The bond will mature in ten years. At a market interest rate of 8% per year compounded quarterly, the present worth of the bond is closest to Select one: A. $14,235 B. $18,161 C. $20,963 D. $23,610

Question text

A $25,000 bond has interest payable at 4% per year compounded quarterly. The bond will mature in ten years. At a market interest rate of 8% per year compounded quarterly, the present worth of the bond is closest to Select one: A. $14,235 B. $18,161 C. $20,963 D. $23,610 A $25,000 bond has interest payable at 4% per year compounded quarterly. The bond will mature in ten years. At a market interest rate of 8% per year compounded quarterly, the present worth of the bond is closest to Select one: A. $14,235 B. $18,161 C. $20,963 D. $23,610 Select one: A. $14,235 B. $18,161 C. $20,963 D. $23,610 A. $14,235 B. $18,161 C. $20,963 D. $23,610

Explanation / Answer

1)

P = 60,000 + 25,000(P/F, 8%, 1) + 10,000/0.08(P/F, 8%, 1)

   = 60,000 + 25,000(0.9259) + 125,000(0.9259)

   = $198,885

Answer is (a)

2)

V = bond face value

V(0.10)/4 = 500

V = $20,000

Answer is (d)

3)

Interest = (25,000)(0.04)/4

                        = $250 every three months

P = 250(P/A, 2%, 40) + 25,000(P/F, 2%, 40)

   = 250 (27.3555) + 25,000 (0.4529)

   = $18,161.38

Answer is (b)

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