1. Northwest Iron and Steel is considering getting involved in electronic commer

Question

1. Northwest Iron and Steel is considering getting involved in electronic commerce. A modest e-commerce package is available for $30,000. The company wants to recover the cost in 2 years. Find the equivalent amount of new revenue that must be realized every 6 months at an interest rate of 3% per month.

The equivalent amount of new revenue that must be realized every 6 months at an interest rate of 3% per month is $  .

2. How much would your parents have to deposit each month into an account that grows at a rate of 12% per year compounded quarterly if they want to have $82,000 at the end of year 4 to cover part of your college expenses? Assume no interperiod compounding.

Parents have to deposit $  each month.

3. Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $125,000 in year one and increase by 2% each year through year five. What is the equivalent annual worth of the maintenance costs at an interest rate of 10% per year, compounded weekly?

The equivalent annual worth is $  .

Explanation / Answer

Ans 2)

Let that amount be X which is deposited every month we get

Interest rate is compounded quarterly then we hve

(1+3%)^4-1=12.55%

X(1+(12.55%)/12)+X(1+(12.55%)/12)^2+X(1+(12.55%)/12)^3+,,,+X(1+(12.55%)/12)^48=82000

X(62.58)=82000

X=82000/62,58=$1310.52

HEnce parents have to deposit $1310.52 each minth

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