1.2 4. An individual wishes to deposit a certain quantity of money now so that he will have$500 at the end of five years. What is the amount of the deposit with an interest rateof 4% per year, compounded semiannually?5. A steam boiler is purchased on the basis of guaranteed performance. A test indicatesthat the operating cost will be $300 more per year than the manufacturer guaranteed.If the expected life of the boiler is 20 years, and money is worth 8%, what amountshould the purchaser deduct from the purchase price to compensate for the extraoperating cost?6. A project has an investment cost of $10,000, uniform annual benefits of $2,400, and asalvage value of $3,000 at the end of its 10-year useful life. At 12% interest, what isthe net present worth (NPW) of the project?

Present value is the value of investment in today's dollar. Future value is the value of investment…

4. An individual wishes to deposit a certain quantity of money now so that he will have $500 at the end of five years. What is the amount of the deposit with an interest rate of 4% per year, compounded semiannually?

4. An individual wishes to deposit a certain quantity of money now so that he will have $500 at the end of five years. What is the amount of the deposit with an interest rate of 4% per year, compounded semiannually?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1.2

4. An individual wishes to deposit a certain quantity of money now so that he will have
$500 at the end of five years. What is the amount of the deposit with an interest rate
of 4% per year, compounded semiannually?
5. A steam boiler is purchased on the basis of guaranteed performance. A test indicates
that the operating cost will be $300 more per year than the manufacturer guaranteed.
If the expected life of the boiler is 20 years, and money is worth 8%, what amount
should the purchaser deduct from the purchase price to compensate for the extra
operating cost?
6. A project has an investment cost of $10,000, uniform annual benefits of $2,400, and a
salvage value of $3,000 at the end of its 10-year useful life. At 12% interest, what is
the net present worth (NPW) of the project?

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