ENGINEERING ECONOMY(LOOSELEAF)
ENGINEERING ECONOMY(LOOSELEAF)
8th Edition
ISBN: 9781260152814
Author: Blank
Publisher: MCG
Question
Book Icon
Chapter 2, Problem 1P
To determine

Calculate the interest factor.

Expert Solution & Answer
Check Mark

Explanation of Solution

Option (1):

The interest rate (i) is 10% and time period is 7 years.

The future to present compound interest factor (If) can be calculated as follows:

If=(1+i)n=(1+0.1)7=1.9487

The future to present compound interest factor is 1.9487.

Option (2):

The interest rate (i) is 12% and time period is 10 years.

The equivalent annual to present interest factor (EA) can be calculated as follows:

EA=i(1+i)n(1+i)n1=0.12(1+0.12)10(1+0.12)101=0.12(3.1058)3.10581=0.37272.1058=0.17699

The equivalent annual to present interest factor is 0.17699.

Option (3):

The interest rate (i) is 15% and time period is 20 years.

The present growth interest factor (Pg) can be calculated as follows:

Pg=1i((1+i)n1i(1+i)nn(1+i)n)=10.15((1+0.15)2010.15(1+0.15)2020(1+0.15)20)=6.6667(16.3665410.15(16.36654)2016.36654)=6.6667(15.366542.454982016.36654)=6.6667(6.25931.222)=6.6667(5.0373)=33.5822

The present growth interest factor is 33.5822.

Option (4):

The interest rate (i) is 2% and time period is 50 years.

The future to annual interest factor (Fa) can be calculated as follows:

Fa=(1+i)n1i=(1+0.02)5010.02=2.691610.02=84.58

The future to annual interest factor is 84.58.

Option (5):

The interest rate (i) is 35% and time period is 15 years.

The annual growth interest factor (Ag) can be calculated as follows:

Fa=1in(1+i)n1=10.3515(1+0.35)151=2.85711590.15851=2.85710.1682=2.6889

The annual growth interest factor is 2.6889.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
The figure to the right shows the economy initially in equilibrium at output Upper Y 0Y0.   Suppose that the price level in the economy increases.   Using the line drawing​ tool, show the impact this increase has on the AE curve. Properly label this line AE Subscript 1.   ​Note: Carefully follow the instructions above and only draw the required object.     According to your​ graph, the relationship between the price level and the level of aggregate output​ (income) is (indeterminate, positive, negative) --> pick one answer.picture is attached.
Use graph A on the right to determine what happens to the equilibrium values of the interest rate and output when there is an increasean increase in government spending​ (G) with the Fed changing the money supply ​(M Superscript S​) by enough to keepby enough to keep interest rates constantinterest rates constant.   ​1.) Using the​ 3-point curved line drawing​ tool, illustrate the impact of the increaseincrease in G. Properly label your curve.   ​2.) Using the line drawing​ tool, illustrate the impact of the​ Fed's money supply decision. Properly label your curve.   ​3.) Using the point drawing​ tool, identify the​ economy's new equilibrium point. Use graph B on the right to determine what happens to the equilibrium values of the interest rate and output when there is anan increaseincrease in Upper GG with no change in the money supplythe money supply.   ​1.) Using either the​ 3-point curved line drawing tool to shift the IS curve or using the line drawing tool to shift the Fed rule​…
Some economists argue that the​ "animal spirits" of investors are so important in determining the level of investment in the economy that interest rates do not matter at all. Part 2 a. Suppose that this were truelong dash—that investment in no way depends on interest rates.   Using the line drawing​ tool, show what the investment curve would look like. Label the line​ 'I'.   is my answer correct?

Chapter 2 Solutions

ENGINEERING ECONOMY(LOOSELEAF)

Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Text book image
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Text book image
Microeconomic Theory
Economics
ISBN:9781337517942
Author:NICHOLSON
Publisher:Cengage
Text book image
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Microeconomics A Contemporary Intro
Economics
ISBN:9781285635101
Author:MCEACHERN
Publisher:Cengage