Solve the following problems:1. In order to build a new warehouse facility, the regional distributor for ValcoMulti-Position Valves borrowed $1.6 million at 10% per year interest. If thecompany repaid the loan in a lump sum amount after 2 years, what was (a) theamount of the payment, and (b) the amount of interest?2. A sum of $2 million now is equivalent to $2.42 million 1 year from now at whatinterest rate?3. In order to restructure some of its debt, General Motors decided to pay off oneof its short-term loans. If the company borrowed the money 1 year ago at aninterest rate of 8% per year and the total cost of repaying the loan was $82 million,what was the amount of the original loan?4. How many years would it take for an investment of $280,000 to cumulate to atleast $425,000 at 15% per year interest?5. Valtro Electronic Systems, Inc. set aside a lump sum of money 4 years ago inorder to finance a plan expansion now. If the money was invested in a 10% peryear simple interest certificate of deposit, how much did the company set aside ifthe certificate is now worth $850,000?6. Two years ago, ASARCO, Inc. invested $580,000 in a certificate of deposit thatpaid simple interest of 9% per year. Now the company plans to invest the totalamount accrued in another certificate that pays 9% per year compound interest.How much will the new certificate be worth 2 years from now?7. How many years would it take for money to triple in value at 20% per yearsimple interest?8. If Farah Manufacturing wants its investments to double in value in 4; years, whatrate of return would it have to make on the basis of (a) simple interest and (b)compound interest?9. What simple interest rate per year would be required to accumulate the sameamount of money in 2 years as 20% per year compound interest?a. 20.5%b. 21%c. 22%d. 23%10. Which of the following 1-year investments has the highest rate of return?(a) $12,500 that yields $1125 in interest,(b) $56,000 that yields $6160 in interest, or(c) $95,000 that yields $7600 in interest.11. At an interest rate of 15% per year, an investment of $100,000 one year ago isequivalent to how much now?12. A welding company has extra funds to invest for future capital expansion. Ifthe selected investment pays simple interest, what interest rate would be requiredfor the amount to grow from $60,000 to $90,000 in 5 years?13. To finance a new product line, a company that makes high-temperature ballbearings borrowed $1.8 million at 10% per year interest. If the company repaidthe loan in a lump sum amount after 2 years, what was(a) the amount of the payment and (b) the amount of interest? 14. If interest is compounded at 20% per year, how long will it take for $50,000 toaccumulate to $86,400?15. At an interest rate of 10% per year, the equivalent amount of $10,000 one yearago is closest to:(a) $8264(b) $9091 (c) $11,000 (d) $12,00016. Assume that you and your friend each have $1000 to invest. You invest yourmoney in a fund that pays 10% per year compound interest. Your friend investsher money at a bank that pays 10% per year simple interest. At the end of 1 year,the difference in the total amount for each of you is:(a) You have $10 more than she does(b) You have $100 more than she does(c) You both have the same amount of money(d) She has $10 more than you do17. The time it would take for a given sum of money to double at 4% per yearsimple interest is closest to:(a) 30 years (b) 25 years(c) 20 years (d) 10 years18. Suppose your city is building a new park, and issues bonds to raise the moneyto build it. You obtain a $1,000 bond that pays 5% simple interest annually thatmatures in 5 years. How much interest will you earn?19. If the difference between Simple Interest and Compound Interest on a certainsum of money in 2 years at 20 % p.a. is Rs. 800, then find the sum.20. The compound interest on a certain sum of money for 2 years is Rs. 52 and thesimple interest for the same time at the same rate is Rs. 50. Find the rate %.21. The population of a town has a constant growth of 4% p.a. If its presentpopulation is 62,500, what will be its population after two years?22. The cost of a new washing machine is Rs. 12000. Its value depreciates everyyear at the rate of 10%. What will be its value after three years?23. James borrowed $600 from the bank at some rate per annum and that amountbecomes double in 2 years. Calculate the rate at which James borrowed the money.24. Amount of Rs. 12800 was invested by Mr Rohan dividing it into two differentinvestment schemes A and B at a simple interest rate of 11% and 14%. What wasthe amount in plan B if the amount of interest earned in two years was Rs. 3508.25. The time required for a sum of money to amount to five times itself at 16%simple interest p.a. will be

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1. In order to build a new warehouse facility, the regional distributor for Valco Multi-Position Valves borrowed $1.6 million at 10% per year interest. If the company repaid the loan in a lump sum amount after 2 years, what was (a) the amount of the payment, and (b) the amount of interest?

1. In order to build a new warehouse facility, the regional distributor for Valco Multi-Position Valves borrowed $1.6 million at 10% per year interest. If the company repaid the loan in a lump sum amount after 2 years, what was (a) the amount of the payment, and (b) the amount of interest?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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