Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle costs $75,000 and will generate delivery revenue of $30,000 in year 1; they anticipate this revenue will increase by 5% in each of the following five years (years 2-6) due to inflation. If Robinson Co. purchases the vehicle, it will take a loan for $60,000 that charges 4% annual interest and repay the loan in 6 equal end of year payments. At the end of the 6 years, the vehicle will be sold for $10,000 (in then-current dollars). The tax rate is 25%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co. uses an after-tax MARR of 10%, compute the PW and determine whether Robinson Co. should purchase the new business vehicle. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property.

Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle costs $75,000 and will generate delivery revenue of $30,000 in year 1; they anticipate this revenue will increase by 5% in each of the following five years (years 2-6) due to inflation. If Robinson Co. purchases the vehicle, it will take a loan for $60,000 that charges 4% annual interest and repay the loan in 6 equal end of year payments. At the end of the 6 years, the vehicle will be sold for $10,000 (in then-current dollars). The tax rate is 25%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co. uses an after-tax MARR of 10%, compute the PW and determine whether Robinson Co. should purchase the new business vehicle. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose you have an opportunity to invest in a fund that pays 11% interest compounded annually. Today, you invest $5,000 into this fund. Three years later (EOY 3), you borrow $2,500 from a local bank at 6% annual interest and invest it in the fund. Two years later (EOY 5), you withdraw enough money from the fund to repay the bank loan and all interest due on it. Three years from this withdrawal (EOY 8) you start taking $1,000 per year out of the fund. After five withdrawals of $1,000, you have withdrawn your original $5,000. The amount remaining in the fund is earned interest. How much remains? Click the icon to view the interest and annuity table for discrete compounding when i = 6% per year. Click the icon to view the interest and annuity table for discrete compounding when i= 11% per year. www
If a nominal interest rate of 8% is compounded continuously, determine the unknown quantity in each of the following situations: a. What uniform EOY amount for 11 years is equivalent to $9,000 at EOY 11? b. What is the present equivalent value of $950 per year for 13 years? c. What is the future equivalent at the end of the sixth year of $232 payments made every six months during the six years? The first payment occurs six months from the present and the last occurs at the end of the sixth year. d. Find the equivalent lump-sum amount at EOY nine when P = $900. Click the icon to view the interest and annuity table for continuous compounding when i = 8% per year. a. The uniform EOY amount is $ (Round to the nearest dollar.) b. The present equivalent value $950 per year for 13 years is $ c. The future equivalent is $ (Round to the nearest dollar.) d. The equivalent lump-sum amount is (Round to the nearest dollar.) (Round to the nearest dollar.)
Rosa, age 35, is starting her savings plan this year by putting away $2,900.00 at the end of every year until she reaches age 65. She will deposit this money at her local savings and loan at an interest rate of 6%. The future value annuity interest factor is 79.0582. Based on the information provided, by the time Rosa turns 65, she will have . Nick started his investment program five years earlier and set aside more than Rosa. By the time Nick turns 65, he will have accumulated more than Rosa.
Suppose you make an annual contribution of P11,036 each year to a college fund for a niece. He is 5 years now, and you will start next year and make the last deposit when he is 21. The fund is a money market account earning 8.82% per year. What will it be worth immediately after the last deposit? Write your answer in two decimal places.
The nominal interest rate is 14% compounded semiannually. What amount will need to be deposited every six months to be able to have enough money to pay three annuity payments of $20,000 for three years beginning at the end of year seven? The deposits begin now and continue every six months until six deposits have been made. The amount to be deposited every six months is $ (Round to the nearest dollar.)
Topic: Annuities 1. Determine the amount needed now to purchase a machine for ₱100,000.00, provide an annual fund of ₱15,000.00 for operation and maintenance, and to replace it at the same cost at the end of every ten-year period. Money is worth 7.5% compounded annually. (Ans: ₱394,247.90)
You received a credit card application from Sun Bank offering an introductory rate of 3% per year compounded monthly for the first six months, increasing thereafter to 18% compounded monthly. This offer is good as long as you transfer your current debt from your existing card. Assuming that you will transfer $5,000 balance, you will continue to make $150 monthly payment(without making any subsequent purchases), what would be the credit card balance at the end of the first year?
Before last year, Ellie (Luke's wife) taught music and earned $30,400. She also earned $9,600 by renting out their basement as a studio apartment. Ellie saves every month. At the end of a typical year she would have saved a total of 10% from her wages and the income earned from the basement for the entire year, and earned a total of 0.5% in interest (for the entire year). At the beginning of last year, Ellie stopped teaching music. She also stopped renting out their basement, and began to use it as the office for her new web design business. The balance on her savings account was $150,000, and she took $5,000 from this account to buy a new laptop computer and a new printer (which also functions as a scanner and a facsimile). She also borrowed $12,000 from the local bank to purchase additional machinery and equipment (a graphics tablet, desktop computer, studio camera and an external hard drive). Her loan payment is $250 per month. During last year, she paid $3,000 for the lease of a…
You have P10,000 and wish to receive an annual annuity for 10 years. The annual interest rate is 8% How much will you receive each year (to the nearest cent)?
4) (28 points) An employee has decided to make annual contributions over a 15-year period into a retirement fund. She wants to make her first contribution of $5,000 one year from now (t=1). She then plans to increase her annual contribution by $500 each year for the remaining years. The fund is expected to earn 15% per year compounded annually. She decides to retire in 15 years (from now). a) (20 points) Assuming that the fund will be depleted when the last withdrawal is made, what equal amount can she withdraw annually for a period of 10 years starting one year after retirement? b) (8 points) If she wants the fund to have a balance at the time of the 10th withdrawal exactly equal to the balance it had when she retired, what equal amount can she withdraw annually for a period of 10 years starting one year after retirement?
A contractor borrows $30000 at 12% compounded quarterly. He wishes to repay the money with 12 equal semiannual installments. What is the effective semiannually inerest rate? put the rate as a number "1.00" Not "1.00%", NOT "0.01" What must be the size of the payment if the first payment is made 1 year after obtaining the $30000?
If P15,000 is invested in a bank today with a simple interest rate of 9% annually, how much will it become after seventeen months?