Engineering Economy (16th Edition) - Standalone book
16th Edition
ISBN: 9780133439274
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 42P
To determine
Calculate the effective interest rate.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Automobiles of the future will most likely be manufactured largely with carbon fibers made from recycled plastics, wood pulp, and cellulose. Replacing half the ferrous metals in current automobiles could reduce a vehicle’s weight by 60% and fuel consumption by 30%. One impediment to using carbon fibers in cars is cost. If the justification for the extra sticker price of carbon-fiber cars is solely based on fuel savings, how much extra sticker price can be justified over a six-year life span if the carbon-fiber car would average 39 miles per gallon of gasoline compared to a conventional car averaging 30 miles per gallon? Assume that gasoline costs $4.00 per gallon, the interest rate is 20% per year, and 117,000 miles are driven uniformly over six years.
Suppose you make 30 annual investments in a fund that pays 7% compounded annually. If your first deposit is $6,000 and each
successive deposit is 7% greater than the preceding deposit, how much will be in the fund immediately after the 30th deposit?
F=$
Round your answer to the nearest dollar. The tolerance is ± 5.
Liam O'Kelly is 20 years old and is thinking about
buying a term life insurance policy with his wife
as the beneficiary. The quoted annual premium
for Liam is $8.44 per thousand dollars of
insurance coverage. Because Lia, wants a
$110,000 policy (which is 2.5 times his annual
salary), the annual premium would be $928, with
the first payment due immediately (i.e., at age
21). A friend of Liam's suggests that the $928
annual premium should be deposited in a good
mutual fund rather than in the insurance policy.
"If the mutual fund earns 8% per year, you can
become a millionaire by the time you retire at age
65," the friend advises.
Is the friend's statement really true?
What is the future value of annual premiums
deposited in a good mutual fund?
Chapter 5 Solutions
Engineering Economy (16th Edition) - Standalone book
Ch. 5.A - Use the ERR method with = 8% per year to solve for...Ch. 5.A - Apply the ERR method with = 12% per year to the...Ch. 5.A - Are there multiple IRRs for the following...Ch. 5.A - Are there multiple IRRs for the following cash...Ch. 5 - Tennessee Tool Works (TTW) is considering...Ch. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - A large induced-draft fan is needed for an...
Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Determine the FW of the following engineering...Ch. 5 - Prob. 22PCh. 5 - Fill in Table P5-23 below when P = 10,000, S = 2,...Ch. 5 - Prob. 24PCh. 5 - A simple, direct space heating system is currently...Ch. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Stan Moneymaker has been informed of a major...Ch. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Prob. 43PCh. 5 - To purchase a used automobile, you borrow 10,000...Ch. 5 - Your boss has just presented you with the summary...Ch. 5 - Experts agree that the IRR of a college education...Ch. 5 - A company has the opportunity to take over a...Ch. 5 - The prospective exploration for oil in the outer...Ch. 5 - Prob. 49PCh. 5 - An integrated, combined cycle power plant produces...Ch. 5 - A computer call center is going to replace all of...Ch. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - Prob. 56PCh. 5 - Prob. 57PCh. 5 - Prob. 58PCh. 5 - Prob. 59PCh. 5 - a. Calculate the IRR for each of the three...Ch. 5 - Prob. 61PCh. 5 - Prob. 62PCh. 5 - Prob. 63PCh. 5 - Prob. 64SECh. 5 - Prob. 65SECh. 5 - Prob. 66SECh. 5 - A certain medical device will result in an...Ch. 5 - Refer to Problem 5-61. Develop a spreadsheet to...Ch. 5 - Prob. 69CSCh. 5 - Prob. 70CSCh. 5 - Suppose that the average utilization of the CVD...Ch. 5 - Prob. 72FECh. 5 - Prob. 73FECh. 5 - Prob. 74FECh. 5 - Prob. 75FECh. 5 - Prob. 76FECh. 5 - Prob. 77FECh. 5 - Prob. 78FECh. 5 - Prob. 79FECh. 5 - A new machine was bought for 9,000 with life of...Ch. 5 - Prob. 81FECh. 5 - Prob. 82FECh. 5 - Prob. 83FECh. 5 - Refer to Problem 5-2. Assuming the residual value...
Knowledge Booster
Similar questions
- You are an avid 34 year old coffee drinker, and never miss a day without your $4.00 Starbucks caffe latte. However, you also understand the importance of the time value of money and saving for retirement early, so you set a New Year's Resolution to abstain from your coffee-drinking ways this year. At the end of the year, you will place all of your coffee savings in a retirement account. How much will this savings amount to when you retire in 30 years at the age of 65, if invested at a 7.5% annual interest rate (rounded to the nearest dollar)? Assume that the cost of the cup of coffee remains unchanged throughout the year.arrow_forwardI want to be earning an annual salary of $100,000 when I retire in 14 years. I have been offered a job that guarantees an annual salary increase of 4% per year, and the starting salary is negotiable. What is the lowest salary that I should request in order to meet my goal? (Round your answer to the nearest cent.)arrow_forwardSuppose you win a raffle held at a neighborhood elementary school fundraiser and are given the choice between two different ways to be paid. You can either accept the money in a lump sum immediately or in a series of payments over time. If you choose the lump sum payout, you receive $2,950 today. If you choose to collect payments over time, you receive three payments: $1,000 today, $1,000 1 year from today, and $1,000 2 years from today. At an interest rate of 10% per year, the winner would be better off accepting the present value. At an interest rate of 12% per year, the winner would be better off accepting lump sum The lump sum is always better. The payments over time are always better. It will depend on the interest rate; advise her to get a calculator. O None of these answers is good advice. payments over time 7 since that choice has the greater since it has the greater present value. A couple years after you win the raffle, you and your friend are back at the same event. This…arrow_forward
- Gary Watson, a graduating business student at a small college, is currently interviewing for a job. Gary was invited by both Tilly Manufacturing Co. and Watson Supply Company to travel to a nearby city for an interview. Both companies have offered to pay Gary’s expenses. His total expenses for the trip were $96 for mileage on his car and $45 for meals. As he prepares the letters requesting reimbursement, he is considering asking for the total amount of the expenses from both employers. His rationale is that if he had taken separate trips, each employer would have had to pay that amount. How are the other students and professors at the college potentiall affected by Gary's decision? Why is the correct thing to do? What should Gary do if both companies sent a check to cover expenses without sneding a request for the reimbursment?arrow_forwardSuppose that P400 is deposited each year into a bank account that pays 8% interest annually. If 12 payments are made into the account, How much would be accumulated in this fund by the end of the 12th year? The first payment occurs at time zero (now)arrow_forwardWhen you take your first job, you decide to start saving right away for your retirement. You put P 5,000 per month (payment done at the start of each month) into the company pension plan, which an APR of 8%. Five years later, you move to another company and start a new PENSION plan. You never get around to merging the funds in the two plans. If the first plan continued to earn interest at the rate of 8% per year for 35 years after you stopped making contributions, how much is the account worth.arrow_forward
- A salesman from vendor A, who is trying to get his foot in the door at Filerbee, Inc., offered water desalting equipment for $2.1 million. This is $400,000 more than the price that a saleswoman from vendor B offered, if purchased and paid for now. However, as a special offer, vendor A said Filerbee won’t have to pay until the warranty runs out. If the equipmenthas a 2-year warranty, determine which offer is better. The company’s real MARR is 12% per year and the inflation rate is 4% per year.arrow_forwardLilly deposits $800 every month into an account that earns 5% annual interest where interest is compounded semiannually. How much would be in the account at the end of 4 years? ( Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±20.)arrow_forwardYou sure it is 12.232 and not 14.232 for period 2?arrow_forward
- Answer all parts of the economics problemarrow_forwardThe Fly-by-Night finance company advertises a "bargain 6% plan" for financing the purchase of automobiles. To the amount of the loan being financed, 6% is added for each year money is owed. This total is then divided by the number of months over which the payments are to be made, and the result is the amount of the monthly payments. For example, a woman purchases a $10,000 automobile under this plan and makes an initial cash payment of $2,500. She wishes to pay the $7,500 balance in 24 monthly payments: Find the IRR and Effective Annual Interest rate. Purchase price -Initial payment = Balance due, (Po) +6% finance charge = 0.06 × 2 years × $7,500 = Total to be paid .. Monthly payments (A) = $8,400/24 = $10,000 2,500 7,500 900 8,400 $350arrow_forwardTo make CDs look more attractive as an investment than they really are, some banks advertise that their rates are higher than their competitors' rates; however, the fine print says that the rate is based on simple interest. If you were to deposit $16,000 at 10.00% per year simple interest in a CD, what compound interest rate would yield the same amount of money in 3 years? (Round the final answer to three decimal places.) The compound interest rate that would yield the same amount of money in 3 years is % per year.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