ENGR.ECONOMIC ANALYSIS W/DASHBOARD
14th Edition
ISBN: 9780190063467
Author: NEWNAN
Publisher: OXF
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Question
Chapter 4, Problem 107P
To determine
Tabular Representation of the balance due, principal payment, and interest rate.
Expert Solution & Answer
Answer to Problem 107P
The monthly payment is $77.46 and the interest paid in the last month is $0.39.
Explanation of Solution
Given information:
- Loan Amount - $15,000
- Time period − 36 months & 60 months.
- Rate of Interest − 8.9% per annum.
- Capital Recovery Factor:
The capital recovery factor is used to find the uniform annual amount A of a uniform series from a known present worth at the given interest rate i. It is calculated as:
Calculation:
- For 36 months The loan amount is $15,000. The monthly payments are to be made, therefore, the rate of interest will be divided by 12
| Months | Total Payment | Principal | Interest Rate | Opening Balance | Closing Balance |
| 1 | 476.30 | 365.05 | 111.25 | 15000.00 | 14634.95 |
| 2 | 476.30 | 367.76 | 108.54 | 14634.95 | 14267.20 |
| 3 | 476.30 | 370.48 | 105.82 | 14267.20 | 13896.71 |
| 4 | 476.30 | 373.23 | 103.07 | 13896.71 | 13523.48 |
| 5 | 476.30 | 376.00 | 100.30 | 13523.48 | 13147.48 |
| 6 | 476.30 | 378.79 | 97.51 | 13147.48 | 12768.70 |
| 7 | 476.30 | 381.60 | 94.70 | 12768.70 | 12387.10 |
| 8 | 476.30 | 384.43 | 91.87 | 12387.10 | 12002.67 |
| 9 | 476.30 | 387.28 | 89.02 | 12002.67 | 11615.39 |
| 10 | 476.30 | 390.15 | 86.15 | 11615.39 | 11225.24 |
| 11 | 476.30 | 393.04 | 83.25 | 11225.24 | 10832.20 |
| 12 | 476.30 | 395.96 | 80.34 | 10832.20 | 10436.24 |
| 13 | 476.30 | 398.90 | 77.40 | 10436.24 | 10037.34 |
| 14 | 476.30 | 401.85 | 74.44 | 10037.34 | 9635.49 |
| 15 | 476.30 | 404.83 | 71.46 | 9635.49 | 9230.65 |
| 16 | 476.30 | 407.84 | 68.46 | 9230.65 | 8822.82 |
| 17 | 476.30 | 410.86 | 65.44 | 8822.82 | 8411.95 |
| 18 | 476.30 | 413.91 | 62.39 | 8411.95 | 7998.04 |
| 19 | 476.30 | 416.98 | 59.32 | 7998.04 | 7581.06 |
| 20 | 476.30 | 420.07 | 56.23 | 7581.06 | 7160.99 |
| 21 | 476.30 | 423.19 | 53.11 | 7160.99 | 6737.80 |
| 22 | 476.30 | 426.33 | 49.97 | 6737.80 | 6311.48 |
| 23 | 476.30 | 429.49 | 46.81 | 6311.48 | 5881.99 |
| 24 | 476.30 | 432.67 | 43.62 | 5881.99 | 5449.32 |
| 25 | 476.30 | 435.88 | 40.42 | 5449.32 | 5013.43 |
| 26 | 476.30 | 439.12 | 37.18 | 5013.43 | 4574.32 |
| 27 | 476.30 | 442.37 | 33.93 | 4574.32 | 4131.95 |
| 28 | 476.30 | 445.65 | 30.65 | 4131.95 | 3686.29 |
| 29 | 476.30 | 448.96 | 27.34 | 3686.29 | 3237.34 |
| 30 | 476.30 | 452.29 | 24.01 | 3237.34 | 2785.05 |
| 31 | 476.30 | 455.64 | 20.66 | 2785.05 | 2329.41 |
| 32 | 476.30 | 459.02 | 17.28 | 2329.41 | 1870.38 |
| 33 | 476.30 | 462.43 | 13.87 | 1870.38 | 1407.96 |
| 34 | 476.30 | 465.86 | 10.44 | 1407.96 | 942.10 |
| 35 | 476.30 | 469.31 | 6.99 | 942.10 | 472.79 |
| 36 | 476.30 | 472.79 | 3.51 | 472.79 | 0.00 |
- For 60 months
| Months | Total Payment | Principal | Interest Rate | Opening Balance | Closing Balance |
| 1 | 310.65 | 199.40 | 111.25 | 15000.00 | 14800.60 |
| 2 | 310.65 | 200.88 | 109.77 | 14800.60 | 14599.73 |
| 3 | 310.65 | 202.37 | 108.28 | 14599.73 | 14397.36 |
| 4 | 310.65 | 203.87 | 106.78 | 14397.36 | 14193.49 |
| 5 | 310.65 | 205.38 | 105.27 | 14193.49 | 13988.11 |
| 6 | 310.65 | 206.90 | 103.75 | 13988.11 | 13781.21 |
| 7 | 310.65 | 208.44 | 102.21 | 13781.21 | 13572.77 |
| 8 | 310.65 | 209.98 | 100.66 | 13572.77 | 13362.79 |
| 9 | 310.65 | 211.54 | 99.11 | 13362.79 | 13151.25 |
| 10 | 310.65 | 213.11 | 97.54 | 13151.25 | 12938.14 |
| 11 | 310.65 | 214.69 | 95.96 | 12938.14 | 12723.45 |
| 12 | 310.65 | 216.28 | 94.37 | 12723.45 | 12507.17 |
| 13 | 310.65 | 217.89 | 92.76 | 12507.17 | 12289.28 |
| 14 | 310.65 | 219.50 | 91.15 | 12289.28 | 12069.78 |
| 15 | 310.65 | 221.13 | 89.52 | 12069.78 | 11848.65 |
| 16 | 310.65 | 222.77 | 87.88 | 11848.65 | 11625.88 |
| 17 | 310.65 | 224.42 | 86.23 | 11625.88 | 11401.46 |
| 18 | 310.65 | 226.09 | 84.56 | 11401.46 | 11175.37 |
| 19 | 310.65 | 227.76 | 82.88 | 11175.37 | 10947.60 |
| 20 | 310.65 | 229.45 | 81.19 | 10947.60 | 10718.15 |
| 21 | 310.65 | 231.15 | 79.49 | 10718.15 | 10487.00 |
| 22 | 310.65 | 232.87 | 77.78 | 10487.00 | 10254.13 |
| 23 | 310.65 | 234.60 | 76.05 | 10254.13 | 10019.53 |
| 24 | 310.65 | 236.34 | 74.31 | 10019.53 | 9783.19 |
| 25 | 310.65 | 238.09 | 72.56 | 9783.19 | 9545.10 |
| 26 | 310.65 | 239.85 | 70.79 | 9545.10 | 9305.25 |
| 27 | 310.65 | 241.63 | 69.01 | 9305.25 | 9063.62 |
| 28 | 310.65 | 243.43 | 67.22 | 9063.62 | 8820.19 |
| 29 | 310.65 | 245.23 | 65.42 | 8820.19 | 8574.96 |
| 30 | 310.65 | 247.05 | 63.60 | 8574.96 | 8327.91 |
| 31 | 310.65 | 248.88 | 61.77 | 8327.91 | 8079.03 |
| 32 | 310.65 | 250.73 | 59.92 | 8079.03 | 7828.30 |
| 33 | 310.65 | 252.59 | 58.06 | 7828.30 | 7575.71 |
| 34 | 310.65 | 254.46 | 56.19 | 7575.71 | 7321.25 |
| 35 | 310.65 | 256.35 | 54.30 | 7321.25 | 7064.90 |
| 36 | 310.65 | 258.25 | 52.40 | 7064.90 | 6806.65 |
| 37 | 310.65 | 260.17 | 50.48 | 6806.65 | 6546.48 |
| 38 | 310.65 | 262.09 | 48.55 | 6546.48 | 6284.39 |
| 39 | 310.65 | 264.04 | 46.61 | 6284.39 | 6020.35 |
| 40 | 310.65 | 266.00 | 44.65 | 6020.35 | 5754.35 |
| 41 | 310.65 | 267.97 | 42.68 | 5754.35 | 5486.38 |
| 42 | 310.65 | 269.96 | 40.69 | 5486.38 | 5216.43 |
| 43 | 310.65 | 271.96 | 38.69 | 5216.43 | 4944.47 |
| 44 | 310.65 | 273.98 | 36.67 | 4944.47 | 4670.49 |
| 45 | 310.65 | 276.01 | 34.64 | 4670.49 | 4394.48 |
| 46 | 310.65 | 278.06 | 32.59 | 4394.48 | 4116.43 |
| 47 | 310.65 | 280.12 | 30.53 | 4116.43 | 3836.31 |
| 48 | 310.65 | 282.20 | 28.45 | 3836.31 | 3554.12 |
| 49 | 310.65 | 284.29 | 26.36 | 3554.12 | 3269.83 |
| 50 | 310.65 | 286.40 | 24.25 | 3269.83 | 2983.43 |
| 51 | 310.65 | 288.52 | 22.13 | 2983.43 | 2694.91 |
| 52 | 310.65 | 290.66 | 19.99 | 2694.91 | 2404.25 |
| 53 | 310.65 | 292.82 | 17.83 | 2404.25 | 2111.43 |
| 54 | 310.65 | 294.99 | 15.66 | 2111.43 | 1816.44 |
| 55 | 310.65 | 297.18 | 13.47 | 1816.44 | 1519.27 |
| 56 | 310.65 | 299.38 | 11.27 | 1519.27 | 1219.89 |
| 57 | 310.65 | 301.60 | 9.05 | 1219.89 | 918.29 |
| 58 | 310.65 | 303.84 | 6.81 | 918.29 | 614.45 |
| 59 | 310.65 | 306.09 | 4.56 | 614.45 | 308.36 |
| 60 | 310.65 | 308.36 | 2.29 | 308.36 | 0.00 |
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BEC 3701 - Assignments-...
KWAME NKRUMAH UNIVERSITY
TEACHING FOR EXCELLENCE
SCHOOL OF BUSINESS STUDIES
DEPARTMENT OF ECONOMICS AND FINANCE
ADVANCED MICRO-ECONOMICS (BEC 3701)
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INSTRUCTIONS:
Check instructions below:
LTE
1) Let u(q1,q2) = ln q₁ + q2 be the (direct) utility function, where q₁ and q2the two goods. Denote
P₁ and P2 as the prices of those two goods and let M be per period money income. Derive each of
the following:
a) the ordinary or Marshallian demand functions q₁ = d₂ (P₁, P₂, M) for i = 1,2 [3 Marks]
b) the compensated or Hicksian demand functions q₁ = h₂ (P₁, P2, M) for i = 1,2 [3 Marks]
c) the Indirect Utility Function uº = v(P₁, P2, M) [3 Marks]
d) the Expenditure Function E(P1, P2, U°) [3 Marks]
e) Draw a diagram of the solution. There should be two graphs, one above the other; the
first containing the indifference curves and budget constraint that characterize the
solution to the consumer's choice problem; the second characterizing the demand…
Chapter 4 Solutions
ENGR.ECONOMIC ANALYSIS W/DASHBOARD
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