Q2: Find out the capitalized cost of a certain investment based on the following:[4 marks]1. An initial deposit of $100,0002. Recurring payments of $10,000 each 6 years starting by the end of the first year forinfinity.3. Annual uniform payments of $2,000 starting by the end of year 10 for infinity.Use Interest rate = 6%

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Answered: Q2: Find out the capitalized cost of a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You have just purchased 200 shares of General Electric stock at $15 per share. You will sell the stock when its market price doubles. If you expect the stock price to increase 12% per year, how long do you expect to wait before selling the stock? (See Figure.)
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1. How many years will a deposit triple itself at an interest rate of 7% per annum compounded continuously? 2. A nominal annual rate of interest of 7%, compounded continuously, has an effective annual interest rate of_. 3. At what interest rate, compounded quarterly, will an investment double in 5 years? 4. A house and lot costing P2 Million was bought at a downpayment of P500,000 and P1 Million after one year. The remaining balance will be paid annually, what is the required payment? 5. Mr. Fernandez borrowed P25,000 due in 1 year and P75,000 due in 4 years. He agrees to pay P50,000 in 3year and the balance in 2 years. How much must he pay at the end of two years if money is worth 5% compounded continuously? 6. What is the nominal rate of interest compounded continuously for 8 years if the present worth factor is equal to 0.6187835. 7. If P 8000 is borrowed for 105 days at 12% per annum. How much will be due at the end of 105 days? 8. A man buys an electric fan from a merchant that…
4:09 Assignment 2-2022.pdf 4. Construct a cash flow diagram to find the present worth in year 0 at an interest rate of 12% per year for the following situation. Year Cash Flow, $ 0 5. Construct a cash flow diagram that represents the amount of money that will be accumulated in 20 years from an investment of $30,000 now at an interest rate of 10% per year. 6. for the cash flow diagram shown, what are the present and the future worth in year 4? i = 7%/semiannual period 1 2 470 3 420 2 4 370 0 1-5 5 320 6 3 270 7 Y 220 4 -15,000 +8,500 8 200 :!!! 5G Years Semiannual periods 7. Construct the cash flow diagram for A mechanical device will cost $20,000 when purchased. Maintenance will cost $1000 per year. The device will generate revenues of $5000 per year for 5 years. The salvage value is $7000. 8. Each year Exxon-Mobil expends large amounts of funds for mechanical safety features throughout its worldwide operations. Carla Ramos, a lead engineer for Mexico and Central American operations,…
2. 3. You borrow $80,000 at 5.00% per year and will pay off the loan in equal payments starting one year after the loan is made over a period of ten years. What are the annual end-of-year payments? Determine the amount of interest and principal that are paid each year. What is the total interest paid for the loan? A distillation column is designed, purchased and installed for a cost of $? 6 million Tha
An investor can invest money with a particular bank and earn a stated interest rate of 4.40%; however, interest will be compounded quarterly. What i are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate Periodic rate Effective annual rate Rahul needs a loan and is speaking to several lending agencies about the interest rates they would charge and the terms they offer. He particularly likes his local bank because he is being offered a nominal rate of 4%. But the bank is compounding bimonthly (every two months). What is the effective interest rate that Rahul would pay for the loan? ○ 3.945% 4.152% 4.067% 04.186 % Another bank is also offering favorable terms, so Rahul decides to take a loan of $12,000 from this bank. He signs the loan contract at 5% comanded daily for 12 months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term? (Hint: To calculate the number of days,…
1. You needed $10,000 and obtained the following loan: Loan specifics: You are expected to pay 24 equal monthly installments (SA per month) at APR 12%, compounded monthly, starting from a month from obtaining the loan. If you miss a payment, your APR goes up to 24%, duration of the loan does not change but your monthly fixed payments go up. You miss your 12th payment. On the day of your 13th payment, the bank offers you a new deal. If you pay an additional $820 at the time of your 13th payment, you will continue to make your payments as before with no interest hike. a) Would you prefer to make the additional payment or have the interest hike?
5. You receive payments of $10,000 per year from a family trust, but you don't need that money right now. Find FV Annuity: If you deposit your annual payments into an account earning 2% per year, what will be the account balance in 10 years? C= 10,000 r = 0.02 t = 10 (1 = i)^n FV = C =? Find FV Annuity: If you deposit your annual payments into an account earning 2% per year, what will be the account balance in 5 years?
Suppose you purchased a corporate bond with a 10-year maturity. a $1,000par value, a 10% coupon rate, and semiannual interest payments. What all this means that you receive $50 interest payment at the end of each six-month period for 10 years (20 times). Then, when the bond matures, you will receive the principal amount (the face value) in a lump sum. Three years after the bonds were purchased, the going rate of interest (coupon rate) on new bonds fell to 6% (or 6% compounded semiannually). What is the current market value (P) of the bond (3 years after the purchase)?
Please help me answer numbers 2 & 4. Thank you!
# 5- According to the cash flow diagram below, for the case where the cost of capital is 25%; Calculate the present (P), the end of the 5th year (F) and the annual equivalent (A) value of money

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