BRAMQuestion 3 (15%) You need to borrow $20,000, and two different companies offer you the following 10-yearpayment plans below. Considering a MARR of 5% : a) Draw the cash flow for both plans; b) Which options shouldyou choose?Plan A: Pays $3,000 in year 1 and annual payment is reduced by $200 every year.Plan B: Pays $2,000 in year 1 and annual payment increases 4% every year.

**Loan Amount: 20,000∗∗∗∗MARR(MinimumAttractiveRateofReturn):5∗∗PlanA:DecreasingAnnualPayment∗∗ Year…

Answered: BRAM Question 3 (15%) You need to…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

You receive a loan for $5,348 where the APR is 5.5%, compounded monthly. You make a payment of $328.28 on this loan every 6 months (i.e., 2 payments per year), which will enable you pay off the loan in eactly 11 years. Immediately after making your regular payment at the end of 8 years, you desire to pay the remainder of the loan in a single payment. Compute the amount you must pay for the remainder of the loan."
Labco Scientific sells high-purity chemicals to universities, research laboratories and pharmaceutical companies. The company wants to invest in new equipment that will reduce shipping costs by better matching the size of the completed products with the size of the shipping container. The new equipment is estimated to cost $575,000 to purchase and install now. (See cash flow diagram below) j= 8% A=? 1 3 4 A= Represents savings every year $575,000 The correct equation to calculate how much Labco must save each year for 5 years in order to justify the investment at an interest rate of 8% per year is: 0.05(1+0.05)* ((1+0.05)* –1) A = 575, 000 0.05 A = 575, 000 ((1+0.05)*–1) 0.08(1+0.08) ((1+0.08) –1) A = 575, 000 O A = 575, 000(1+0.08)°
John is a very cost-conscious investor. His rule of thumb is that it costs $300 per year, starting in the first year of vehicle life to maintain an automobile. This expense increases by $300 each year over the life of the car. John is now considering the purchase of a six-year old car with 40,000 miles on it for $7,000. How much money will John have to set aside now to pay for maintenance (as a lump sum) if he keeps this car for seven years? John's interest rate is 4% per year. Click the icon to view the interest and annuity table for discrete compounding when i = 4% per year. John will have to set aside $ to pay for maintenance. (Round to the nearest dollar.)
You have a bank deposit now worth $4500.How long will it take for your deposit to be worth more than $8600 if: The account pays 6 percent actual interest every half-year and is compounded every half-year?
Hale College predicts that in 18 years it will take $200,000 to attend the college for years. Emma has a substantial amount of cash and wishes to invest a lump sum of money for her child college fund. How much should Emma put aside in an account with an APR of 9% compounded monthly in order to have $200,000 in the account in 18 years? Round your answer to the nearest cent, if necessary.
Please
Question 3 You are looking at purchasing a new computer for your four-year undergraduate program. Brand 1 costs $4,040 now, and you expect it will last throughout your program without any upgrades. Brand 2 costs $2,440 now, and will need an upgrade at the end of two years, which you expect to be $1,725. With an 8% annual interest, compounded monthly, which is the less expensive alternative, if they provide the same level of service and will both be worthless at the end of the four years? [NOTE: In general and unless asked for otherwise, comparisons of project should be conducted in present worth dollars] Which Brand is preferred (enter either '1' or '2')? How much will you save by purchasing your preferred brand over the other? (Round your answer to the nearest dollar and enter it as a positive number) $
You know that paying yourself by depositing money in a savings account is a prudent start to your retirement plan. You determined that, based on your other obligations, you can save 6,375.00 per year via an annual, single year-end deposit. You are 35 years old now, so your money will grow for the next 30 years until you turn 65. You will open a savings account at the Wells Fargo branch near your home. Its savings accounts are paying 6% interest. The following table shows the future value factors for various periods and interest rates: Future Value of an Annuity Factor Year 2% 3% 5% 6% 8% 9% 10% 10 10.950 11.460 12.578 13.180 14.487 15.190 15.937 12 13.412 14.190 15.917 16.870 18.977 20.140 21.384 15 17.293 18.600 21.578 23.270 27.152 29.360 31.772 20 24.297 26.870 33.066 36.780 45.762 51.160 57.274 25 32.030 36.460 47.726 54.860 73.105 84.700 98.346 30 40.567 47.570 66.438 79.060 113.282 136.300 164.491 35 49.994 60.460 90.318 111.430 172.314 215.700…
Assuming I deposit my signing bonus of $36,000 at 9% APR, compounded annually, how much will I have upon retirement in 20 years?
4) Periodic maintenance and rebuild costs is an example about cash inflow estimates. Select one: True False 5) When we have a situation that the payment does not start at the end of period 1, then the series is called shifted series Select one: True False 6) In case of an effective interest rate for continuous compounding, the compounding frequency value is approximate to infinity. Select one: True False
You are considering investing $2,500 at an interest rate of 7.7% compounded annually for seven years or investing the $2,500 at 8% per year simple interest for seven years. Which option is better?
Suppose that on September 30, 2021, a person opened an investment account with an initial deposit of $20,000. The account guarantees to pay interest at a nominal annual rate of 6%, compounded monthly. The person plans to deposit $3,000 into the account at the end of each and every month starting on October 31, 2021 and ending on March 31, 2024 (a total of 30 additional deposits). (a) How much money will be in the account after the 30th additional deposit is made? (b) What is the total amount of interest that will be earned over the 30-month planning horizon? (c) What is the effective annual interest rate that will be earned? Express your answer to the nearest tenth of a percent, i.e., in the form xx.x%.

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