Assignment 2

(engineering economic) The contractor owner applied for a loan to the bank and was approved for a loan of Rp. 1 billion with 10% interest per year with a payback period of 10 years. Refunds are paid in uniform annual installments. The borrower always pays the right installments so that after the fifth year installment is paid, the bank provides an additional loan of Rp. 500 million and reduce interest to 8% per annum. a. Draw the cash flow of the loan and its repayments over 10 years b. Determine the amount of installments each year for the first 5 years and the last 5 years

5. An amount of 50,000 was borrowed at an interest rate of 10% per year and was to be repaid over a 5-year period with annual payments such that the third payment is P2,000 greater than the first two. The fourth payment is 1,000 greater than the third payment and the fifth payment is 1,000 greater than the fourth payment. Determine the size of the first payment, DRAW THE CASH FLOW DIAGRAM.

A financier has made a loan of $12 million. The contract for the loan calls for payment of interest quarterly at a nominal annual rate of 8.1%, until the full principal is repaid in one lump sum at the end of 10 years. After 3 years have gone by, immediately after the quarterly payment, the financier decides to sell the asset to an investor. If the investor values these cash flows with a nominal annual rate of 4.8% when compounded quarterly, what value would the investor consider the remaining loan contract to be worth?

Sanders Co. is planning to finance an expansion of its operations by borrowing $52,100. City Bank has agreed to loan Sanders the funds. Sanders has two repayment options: (1) to issue a note with the principal due in 10 years and with interest payable annually or (2) to issue a note to repay  $5,210 of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is 8.5 percent for each option.   What amount of interest will Sanders pay in year 1 under option 1 and under option 2?   What amount of interest will Sanders pay in year 2 under option 1 and under option 2?

A bank makes an amortizing loan of $200,000 with a maturity of 8 years and equal payments every year. What is the principal outstanding at the end of year 6 if the interest rate is 6%?   A $27,041.78     B $30,384.41     C $59,048.42     D $86,092.20

A bank offers and investment account that has an annual interst rate of 9.9%, compounded quarterly. At the end of a 132 month year period you'd like to have $50,000 in the account. If your investment is made as a lump sum at the beginning how much do you need to contribute?

A debt of ₱75,000 was paid for as follows: ₱15,000 at the end of 18 months, ₱25000 at the end of 24 months, ₱30,000 at the end of 36 months, and a final payment of M at the end of 48 months. The rate of interest was 2% compounded semi-annually.a. Pick a focal date and draw a detailed cash-flow diagram. It is recommended to draw it as big as the width of a letter-sized (whole sheet) paper. b. Declare the focal date.c. Write the equation of value (a) using the symbolic factors, and (b) as a mathematical form (expression).

An amount of $15,000 is borrowed from the bank at an annual interest rate of 12%. Solve, a. Calculate the equal end-of-year payments required to completely pay off the loan in four years. b. Calculate the repayment amounts if the loan ($15,000) will be repaid in two equal installments of $7,500 each, paid at the end of second and fourth years respectively. Interest will be paid each year.

A company borrowed $100,000 from a local bank. The loan requires 10 equal annual payments beginning one year from today. Assume an interest rate of 8%. What is the amount of each annual payment? table, calculator function, or excel payment n j present value

CNB, Inc. will deposit $25,000 into a money market account at the end of each year for the next eight years.  How much will accumulate by the end of the eighth and final payment if the account earns 8% interest? Select one: a. $265,915 b. $256,951 c. $223.070 d. $200,000 e. $275,713

A company is considering purchasing new equipment. The purchase of the equipment is expected to generate after tax savings of $12,600 each year for 8 years. The company can borrow money at 6%. Assume annual compounding. Determine the present value of the future cash inflows.Hint: the $12,600 are your annuity payments

A bank invested $50 million in a two-year asset paying 10 percent interest per year and simultaneously issued a $50 million, one-year liability paying 8 percent interest per year to pay for it. • Is the bank short funded or long funded? • What is the bank’s net interest income in year one? • What will be the bank’s net interest income in year two if at the end of the first year all interest rates have decreased by 1.5 percent (150 basis points)?

A business sets up a sinking fund so they will have a $68,000.00 to pay for a replacement piece of equipment in 12 years when the current equipment will be sold for scrap. If they make deposits at the end of each quarter for 12 years in the investment that pays 6.3% compounded quarterly, what size should each payment be? Answer: The quarterly payments are $. (Round to the nearest cent/penny)

i. 100 is deposited into an account at the beginning of every 4-year period for 40 years.The account credits interest at an annual effective rate of i.The accumulated value in the account at the end of 40 years is X, which is 5 times the accumulated value at the end of 20 years.Calculate Xii. An investment requires an initial payment of 10,000 cedis and annual payment of 1000cedis at the beginning of each year for ten years. Starting at the end of the eleventh year, the investment returns five equal payment of X.Determine the value of X to yield an annual effective rate of interest at 10% over the 15-year period.(B) i. The present value of a series of $5 at the beginning of the investment period

Lorkay Seidens Inc. just borrowed $25,000. The loan is to be repaid in equal installments at the 22 end of each of the next five years, and the interest rate is 10 percent. a. Set up an amortization schedule for the loan. b. How large must each annual payment be if the loan is for $50,000? Assume that the interest rate remains at 10 percent and that the loan is paid off over five years. c. How large must each payment be if the loan is for $50,000, the interest rate is 10 percent, and the loan is paid off in equal installments at the end of each of the next 10 years? This loan is for the same amount as the loan in part (b), but the payments are spread out over twice as many periods. Why are these payments not half as large as the payments on the loan in part (b)?

An initial deposit of $9000 is made into an account now, and a second deposit of $21000 is made into the same account after 15 years. During the first 10 years, the account earns interest quoted at a nominal quarterly discount rate of d%. After 10 years have passed, any money in the account earns a nominal semi-annual interest rate of 5.1%. At the end of 30 years, the total value of the account will be $109149. What is the value of d (to the nearest 0.1%)? d as a percentage, correct to 1 decimal

A trucking firm purchased two B-train trucks for $325 000. It paid 20% as a down paymentand obtained a bank loan for the rest. The loan has a nominal interest rate of 10.5% compoundedmonthly with a 10-year amortization period. The loan term is 10 years. What are the firm's monthlypayments to the bank?