Engineering Economy
Engineering Economy
8th Edition
ISBN: 9780073523439
Author: Leland T Blank Professor Emeritus, Anthony Tarquin
Publisher: McGraw-Hill Education
Question
Book Icon
Chapter 4, Problem 44P

(a):

To determine

Calculate the equivalent monthly value.

(a):

Expert Solution
Check Mark

Explanation of Solution

The borrowing (B) is $80,000. The interest rate (i1) is 6% per year and it is compounded semiannually for two payments. The effective interest rate 1 (Ei1) is 0.5% (612). The interest rate (i2) is 4.2% per year and it is compounded semiannually for third payments. The effective interest rate 2 (Ei2) is 0.35% (4.212). The time period (n) is 60 months (12×5).

The equivalent monthly value (A) can be calculated as follows:

A=B(Ei1(1+Ei1)n(1+Ei1)n1)=80,000(0.005(1+0.005)60(1+0.005)601)=80,000(0.005(1.3488502)1.34885021)=80,000(0.00674430.3488502)=80,000(0.01933)=1,546.4

The equivalent monthly value is $1,546.4.

(b):

To determine

Calculate the current balance.

(b):

Expert Solution
Check Mark

Explanation of Solution

The interest payment in the first year can be calculated as follows:

Interest payment 1=B×Ei1=80,000×0.005=400

The interest payment for the first year is $400.

The interest payment in the second year can be calculated as follows:

Interest payment 2=(B(AInterest payment 1))×Ei=(80,000(1,546.40400))×0.005=(80,0001,146.40)×0.005=78,853360×0.005=394.27

The interest payment for the second year is $394.27.

The current principal payment (CP) can be calculated as follows:

CP=B((A×2)(Interest payment 1Interest payment 2))=80,000((1,546.4×2)400394.27)=80,000(3,092.8400394.27)=80,0002,298.53=77,701.47

The current principal payment is $77,701.47.

(c):

To determine

Calculate the total interest payment.

(c):

Expert Solution
Check Mark

Explanation of Solution

The total interest payment for the first two years can be calculated as follows:

Total interest payment=(Interest payment 1+Interest payment 2)=400+394.27=794.27

The total interest payment for the first two years is $794.27.

(d):

To determine

Calculate the equivalent monthly value.

(d):

Expert Solution
Check Mark

Explanation of Solution

The borrowing (B) is $80,000. The interest rate (i1) is 6% per year and it is compounded semiannually for two payments. The effective interest rate 1 (Ei1) is 0.5% (612). The interest rate (i2) is 4.2% per year and it is compounded semiannually for third payment. The effective interest rate 2 (Ei2) is 0.35% (4.212). The time period (n) is 60 months (12×5).

The equivalent monthly value (A) for second loan can be calculated as follows:

A=Current principal payment(Ei2(1+Ei2)n(1+Ei2)n1)=77,701.47(0.0035(1+0.0035)60(1+0.0035)601)=77,701.47(0.0035(1.233226)1.2332261)=77,701.47(0.0043160.233226)=77,701.47(0.018506)=1,437.94

The equivalent monthly value is $1,437.94.

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
086 pts 400 Question 18 of 24 > © Macmillan integration-hub.macmillanlearning.com Integration Hub ↓ Micro-Economics Flashcards | Quizle = D Hint Submit Answe The graph shows the supply and demand curves of high-fructose corn syrup, a sweetener commonly used in the production of sweets and soda due to its low cost. In an effort to curb health issues, Congress puts an excise or commodity tax on corn syrup at $2 per liter. 1. Shade in the region of the graph representing the total tax revenue that this tax will generate. 2. Shade in the region of the graph representing the deadweight loss that this tax will generate. Price ($) per liter 10 9 Supply 8 7 60 5 3 2 Demand ↓ 0 0 1 2 3 4 5 6 7 8. 9 10 Quantity (millions of liters) 00 MacBook Air Tax Revenue Deadweight Loss 000 000 F4 AA DII DD L F5 F6 F7 F8 F9 F10 F11 % Attempt
what is defecit in economy?
what is economic?  and whatis the different between microeconomic and economic?

Chapter 4 Solutions

Engineering Economy

Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:9780190931919
Author:NEWNAN
Publisher:Oxford University Press
Text book image
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Text book image
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Text book image
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education