Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 25P
a:
To determine
Calculate the annual deposit.
b:
To determine
Calculate the new annual withdrawal.
c:
To determine
Calculate the decrease annual withdrawal.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Your boss, who never took an engineering economy course is buying a new house and needs your help in answering some questions. The loan amount will be in the “jumbo loan” category of $600,000 at (1) 7.0% per year compounded monthly over 30 years, or (2) 6.625% compounded monthly over 15 years. There are no loan initiation fees, points paid, or other charges. Prepayment, if desired, can be done without penalty. Solve, a. What is the monthly payment for plan (1)? b. What is the monthly payment for plan (2)? c. What is the effective annual interest rate for plan (1)? d. What is the effective annual interest rate for plan (2)? e. What is the total interest paid over the life of loan (1)? f. What is the total interest paid over the life of loan (2)?
A commercial real estate developer plans to borrow money to finance an upscale mall in an exclusive area of the city. The developer
plans to get a loan that will be repaid with uniform payments of $425,000 beginning in year 2 and ending in year 16. How much will a
bank be willing to loan at an interest rate of 6% per year?
The bank will be willing to loan the developer a sum of $|
You are planning to make 18 monthly withdrawals beginning at the end of the sixth month. You plan to withdraw $113 in the sixth month and increase your withdrawals by $17 over the previous month’s withdrawal. How much should you deposit now in a bank account that pays 12% per year compounded monthly?
Hint: Determine m and k and use the decision tree to find how you must setup the cash flow equation. Remember to bring all the cash flows to the proper time period required to answer this question.
Chapter 5 Solutions
Basics Of Engineering Economy
Ch. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10P
Ch. 5 - Two machines with the following cost estimates are...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Estimates have been presented to Holly Farms,...Ch. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - A major repair on the suspension system of Janes...Ch. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32APQCh. 5 - Prob. 33APQCh. 5 - Prob. 34APQCh. 5 - Prob. 35APQCh. 5 - Prob. 36APQCh. 5 - The AW values of three revenue alternatives are ...Ch. 5 - Prob. 38APQCh. 5 - Prob. 39APQCh. 5 - Use an interest rate of 10% per year. The...Ch. 5 - Prob. 41APQCh. 5 - Prob. 42APQ
Knowledge Booster
Similar questions
- SMS Inc. wants to have enough money to purchase a new tractor-trailer in 5 years. If the unit will cost $500,000, how much should the company set aside each year (starting at the end of year 1 and each year until year 5) if the account earns a compound interest of 12% per year? (All the alternatives presented below were calculated using compound interest factor tables including all decimal places) $283,700 $138,705 $78,705 $61,615arrow_forwardAn oil and gas producing company owns 40,000 acres of land in a southeastern state. It operates 650 wells which produce 20,000 barrels of oil per year and 1.2 million cubic feet of natural gas per year. The revenue from the oil is $2,000,000 per year and for natural gas the annual revenue is $560,000 per year. What bid should be made to purchase this property if the potential buyer is hoping to make 17% per year on his investment over a period of 9 years.arrow_forwardA $10,000 bond has an interest rate of 6% per year payable quarterly. The bond matures 15 years from now. At a nominal interest rate of 8% per year, compounded quarterly, the present worth of the bond is represented by which of the equations below: PW = 150(P/A, 2%, 60) + 10,000(P/F, 2%, 60) PW = 600(P/A, 2%, 60) + 10,000(P/F, 2%, 60) PW = 600(P/A, 8%, 15) + 10,000(P/F, 8%, 15) PW = 150(P/A, 1.5%, 60) + 10,000(P/F, 1.5%, 60)arrow_forward
- What is the true effective annual rate of a credit card plan that charges 1.5% per month on an unpaid balance?arrow_forwardA rotary engine is the essence of a vertical takeoff and landing (VTOL) personal aircraft known as the Moller Skycar M400. It is a flying car known as a personal air vehicle (PAV) and it is expected to make its first untethered flight in 2020. The PAV has been under development for 30 years at a total cost of $100 million. Assuming the $100 million was spent in an equal amount each year, determine the future worth at the end of the 30-year period at an interest rate of 10% per year.arrow_forwardA credit card issued by the GECU credit union has an APR of 16% and an APY of 16.64%. (a) What is the compounding period? (b) Use the EFFECT function to find the compounding period.arrow_forward
- Determine the F/P factor for 10 years if the interest rate is 2% per month compounded daily. Assume 30 days per month.arrow_forwardAn oil and gas producing company owns 47,000 acres of land in a southeastern state. It operates 700 wells which produce 15,000 barrels of oil per year and 1.4 million cubic feet of natural gas per year. The revenue from the oil is $1,500,000 per year and for natural gas the annual revenue is $561,000 per year. What bid should be made to purchase this property if the potential buyer is hoping to make 14% per year on his investment over a period of 8 years. Click the icon to view the interest and annuity table for discrete compounding when i = 14% per year. $ million or less should be offered for the property. (Round to two decimal places.) Carrow_forwardJennifer and Rex both receive a dividend from their 401(k) retirement plan every 6 months. The earning rates for this year have been 5% per year, compounded quarterly for Jennifer, and 4.85% per year, compounded monthly for Rex. Rex felt good about this because he knew the monthly compounding on his plan would make his APY higher than Jennifer’s APY. (a) Is Rex correct? Explain your answer. (b) What is the effective rate for each plan on the basis of the payment period?arrow_forward
- Assume that 25 years ago your dad invested $260,000, plus $32,000 in Year 2 through 5, and $49,000 per year from Year 6 through Year 25. The annual retirement amount he can withdraw forever starting next year (Year 26), if the interest rate is 12% per year, is nearest to: $1,320,000 $1,131,000 $2,005,500 $1,009,000arrow_forwardYou borrow $780,000 at 7.00% 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. After five years – the fifth year (end of the year) payment is made and then the remaining loan amount is restructured to be paid off over a period of 15 years (e.g. the total life of the loan will be 20 years overall). What are the annual end-of-year payments in the first five years? And the end of year payments for the remaining years? Determine the amount of interest and principal paid each year of the loan. What is the total interest paid for the loan?arrow_forwardXYZ rapid prototyping (RP) software costs $29,000 and lasts one year, and will be expensed (i.e., written off in one year, and treated as an end- of-year cash flow). The cost of the upgrades will increase 11% per year beginning in the second year (again, using end-of-year cash flows). How much can be spent now for an RP software upgrade agreement that lasts three years and must be depreciated with the SL method to zero over three years? MARR is 20% per year (im), and the effective income tax rate (t) is 22%.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education