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1. A business man wishes to set aside semiannual payments to purchase machinery after two years (two years from now). The machinery's estimated cost is Birr 8000. Each payment earns interest at 12% compounded semiannually. a) Find the semiannual payment b) Find the total interest earned c) Prepare a sinking fund schedule

1. A business man wishes to set aside semiannual payments to purchase machinery after two years (two years from now). The machinery's estimated cost is Birr 8000. Each payment earns interest at 12% compounded semiannually. a) Find the semiannual payment b) Find the total interest earned c) Prepare a sinking fund schedule

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1. A business man wishes to set aside semiannual payments to purchase machinery after two years (two years from now). The machinery's estimated cost is Birr 8000. Each payment earns interest at 12%compounded semiannually. a) Find the semiannual payment b) Find the total interest earned c) Prepare a sinking fund schedule 2. Strong steel company operates two steel mills with different production capacities. Mill I can produces 1000 tons per day of AAA steel, 3000 tons per day of AA steel, 5000 tons of per day of A steel. Mill F can produce 2000 tons per day of each grade of steel. The company has made a contract with the construction firm to provide 24,000 tons of AAA steel, 32,000 tons of AA steel and 40,000 tons of A steel. The cost of running mill I is $1,400 per day and mill F is $ 1000 per day. (2 pt each) a) Formulate linear programming model? b) How many amount of mill I and F should be produced? Solve by using graphical method? & Simplex Solution Method 3. A person deposits Birr 10,000 in a savings account that pays 6% compounded semi- annually. Three years later, this person deposits an additional Birr 8,000 in the savings account. Also, at this time, the interest rates changes to 8% compounded quarterly. How much money is in the account 5 years after the original Birr 10,000 is deposited? 4. What rate compounded monthly is equivalent to 8% compounded quarterly? (1 pt) 5. Ms. X has a saving goal of Birr 25,000 which she would like to reach 10 years from now. During the first five years she is financially able to deposit only Birr 100 each month into the savings account. What must her monthly deposits over the last five vears be if she is to reach the goal? The account pays 12% interest compounded monthly.
Transcribed Image Text:1. A business man wishes to set aside semiannual payments to purchase machinery after two years (two years from now). The machinery's estimated cost is Birr 8000. Each payment earns interest at 12%compounded semiannually. a) Find the semiannual payment b) Find the total interest earned c) Prepare a sinking fund schedule 2. Strong steel company operates two steel mills with different production capacities. Mill I can produces 1000 tons per day of AAA steel, 3000 tons per day of AA steel, 5000 tons of per day of A steel. Mill F can produce 2000 tons per day of each grade of steel. The company has made a contract with the construction firm to provide 24,000 tons of AAA steel, 32,000 tons of AA steel and 40,000 tons of A steel. The cost of running mill I is $1,400 per day and mill F is $ 1000 per day. (2 pt each) a) Formulate linear programming model? b) How many amount of mill I and F should be produced? Solve by using graphical method? & Simplex Solution Method 3. A person deposits Birr 10,000 in a savings account that pays 6% compounded semi- annually. Three years later, this person deposits an additional Birr 8,000 in the savings account. Also, at this time, the interest rates changes to 8% compounded quarterly. How much money is in the account 5 years after the original Birr 10,000 is deposited? 4. What rate compounded monthly is equivalent to 8% compounded quarterly? (1 pt) 5. Ms. X has a saving goal of Birr 25,000 which she would like to reach 10 years from now. During the first five years she is financially able to deposit only Birr 100 each month into the savings account. What must her monthly deposits over the last five vears be if she is to reach the goal? The account pays 12% interest compounded monthly.
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