Answered: Josie wants to be able to celebrate her…

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

Josie wants to be able to celebrate her graduation from CSULA in 55 years. She found an annuity that is paying 2%. Her goal is to have $4,500.00. Assume the interest rate remains the same while the account is open. Round all answers to the nearest penny. How much should be deposited each week?

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First let us understand the major points in the question briefly:

Investment= P500,000 for Auto Wash Business in a city of 400,000 population.
Equipment= Wash average 12 cars/hour + two men operates + small hand work.
Hire= Two men to work 8 hour a day + 6 days/week + 50 week/year + 2 week vacation/year
Employee hourly rate= P25.00/hour
Income= P25.00/car wash + the owner is employed at a job that pays P25, 000/month
Out-of-pocket miscellaneous costs= P8,500/month
Write of investment within 5 years
Capital of current business is 15%
Rate of return investment should be 20%

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