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1. A certain annuity pays P(80+N) at the end of every 3 months. If the present value of the annuity is P1,200 and the accumulated amount is P2,000, determine the nominal rate. 2. The average annual cost of damages caused by floods to a certain subdivision located along the Pasig River is estimated at P700,000. To build a gravity dam to protect the area from floods would cost

1. A certain annuity pays P(80+N) at the end of every 3 months. If the present value of the annuity is P1,200 and the accumulated amount is P2,000, determine the nominal rate. 2. The average annual cost of damages caused by floods to a certain subdivision located along the Pasig River is estimated at P700,000. To build a gravity dam to protect the area from floods would cost

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. A certain annuity pays P(80+N) at the end of every 3 months. If the present value of the annuity is P1,200 and the accumulated amount is P2,000, determine the nominal rate. 2. The average annual cost of damages caused by floods to a certain subdivision located along the Pasig River is estimated at P700,000. To build a gravity dam to protect the area from floods would cost P2,500,000 and would involve an annual maintenance cost of P(20,000+36N). With interest at 8% compounded annually, how many years will it take for the dam to pay for itself? 3. A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,000 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 the first year, P180,000 the second year, and P270,000 each year for the next3 years, all payments being made at the beginning of each year. If money is worth (12+N/10)% compounded annually, which bid should the owner of the plant accept? 4. Morris want to start saving for his ten-year old son's college education. If he is guaranteed 6% interest compounded quarterly, how much he would have to save each month to amount to P(12,000+50N) by the time his son is 18 years old? 5. Many persons prepare for retirement by making monthly contributions to a savings program. Suppose that $2,000 is set aside each year and invested in a savings account that pays (10+N/5)% interest per year, compounded continuously. Determine the accumulated savings in this account at the end of 30 years.
Transcribed Image Text:1. A certain annuity pays P(80+N) at the end of every 3 months. If the present value of the annuity is P1,200 and the accumulated amount is P2,000, determine the nominal rate. 2. The average annual cost of damages caused by floods to a certain subdivision located along the Pasig River is estimated at P700,000. To build a gravity dam to protect the area from floods would cost P2,500,000 and would involve an annual maintenance cost of P(20,000+36N). With interest at 8% compounded annually, how many years will it take for the dam to pay for itself? 3. A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,000 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 the first year, P180,000 the second year, and P270,000 each year for the next3 years, all payments being made at the beginning of each year. If money is worth (12+N/10)% compounded annually, which bid should the owner of the plant accept? 4. Morris want to start saving for his ten-year old son's college education. If he is guaranteed 6% interest compounded quarterly, how much he would have to save each month to amount to P(12,000+50N) by the time his son is 18 years old? 5. Many persons prepare for retirement by making monthly contributions to a savings program. Suppose that $2,000 is set aside each year and invested in a savings account that pays (10+N/5)% interest per year, compounded continuously. Determine the accumulated savings in this account at the end of 30 years.
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