A. The cash flow associated with a strip mining operation is expected to be P2,000,000 in year 1, P1,800,000 in year 2, and amounts decreasing by P200,000 per year through 8. At an interest rate of 12% per year, the equivalent annual cash flow is nearest to: B. The present worth of of P40,000 in the first year and amounts of

A. The cash flow associated with a strip mining operation is expected to be P2,000,000 in year 1, P1,800,000 in year 2, and amounts decreasing by P200,000 per year through 8. At an interest rate of 12% per year, the equivalent annual cash flow is nearest to: B. The present worth of of P40,000 in the first year and amounts of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

A. The cash flow associated with a strip
mining operation is expected to
be P2,000,000 in year 1, P1,800,000 in year 2,
and amounts
decreasing by P200,000 per year through 8.
At an interest rate of 12%
per year, the equivalent annual cash flow is
nearest to:
B. The present worth of of P40,000 in the first
year and amounts of
increasing by P3,000 per year through five
years at an interest rate of
13% per year is?

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