ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 40P
(a)
To determine
To construct:A choice table for interest tables from 0% to 50%
(b)
To determine
To select:The best alternative at interest rate of 8%
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Solve using Excel. Show all the formula.
The Financial Advisor is a weekly column in the local newspaper. Assume you must answer the following question. “I need a new car that I will keep for 4 years. I have three options. I can (A) pay $32,999 now, (B) make monthly payments for a 7% 4-year loan with 0% down, or (C) make lease payments of $425 per month for the next 4 years. The lease option also requires an up-front payment of $3500. What should I do?” Assume that the number of miles driven matches the assumptions for the lease, and the vehicle’s value after 4 years is $14,500. Remember that lease payments are made at the beginning of the month, and the salvage value is received only if you own the vehicle.(a) Develop a choice table for nominal interest rates from 0% to 50%. (You do not know what the reader’s interest rate is.)(b) If i = 8%, which option should be chosen?
Someone decides to purchase a vehicle. They will finance the entire purchase and can afford to pay $400 per month. The loan is for 36 months and there is a 7% annual interest rate. What is the maximum purchase price they can afford?
To purchase $14,700 worth of machinery for her business, Ivanna made a down payment of $1700 and took out a business loan for the rest. After 2 years of paying monthly payments of $576.18, she finally paid off the loan.
(a)
What was the total amount Ivanna ended up paying for the machinery (including the down payment and monthly payments)?
(b)
How much interest did Ivanna pay on the loan?
Chapter 8 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 8 - Prob. 1QTCCh. 8 - Prob. 2QTCCh. 8 - Prob. 3QTCCh. 8 - Prob. 4QTCCh. 8 - Prob. 5QTCCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5P
Ch. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10PCh. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - Prob. 14PCh. 8 - Prob. 15PCh. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Prob. 44PCh. 8 - Prob. 45P
Knowledge Booster
Similar questions
- Farmer Sam's farm is in a hilly section of the state. Erosion has always been a problem, but in recent years it has caused a decline in yields. Over the next 5 years, he expects that his profits per acre will fall as seen in the following table. He is considering putting in terraces, which would stop the erosion and hold profits at $10 per acre. If he doesn't pay for terracing, he will put the money in the bank and earn 3% interest per year. What is the present value of profits per acre with and without terracing? Show your math or spreadsheet calculations for each of the 5 years. Year Profits per Acre WITHOUT Terracing Profits per Acre WITH Terracing $10 1 $10 $9 $10 3 $8 $10 4 $7 $10 $6 $10arrow_forwardClaude James, a salesman, needs a new car for business use. He expects to be promoted to a supervisory job after 3 years, and he will no longer be “on the road.” The company reimburses salesmen each month at the rate of 55 per mile driven. Claude believes he should use a 12% interest rate. If the car could be sold for $7500 at the end of 3 years, which method should he use to obtain it? A. Pay cash: the price is $26,000. B. Lease the car: the monthly charge is $700 on a 36-month lease, payable at the end of each month; at the end of the 3-year period, the car is returned to the leasing company. C. Lease the car with an option to buy at the end of the lease: pay $720 a month for 36 months; at the end of that time, Claude could buy the car, if he chooses, for $7000.arrow_forwardEd opened a savings account 5 years ago with $600. The account earns 3% simple interest per year, and Ed has not added or withdrawn from the account. How much interest has Ed earned?arrow_forward
- Engineering Economy Question is image The construction cost of a hydroelectric power plant is $400000, the maintenance cost (done every 10 years) is $50000, and the annual operating cost is $1000. With this power plant, 1 million kWh of electricity will be produced annually. Which selling price (per kWh) of electricity makes the construction of the power plant viable when the interest rate is 20%?If necessary, you can choose more than one options.arrow_forwardThe interest is 5%arrow_forwarda) Cash Flow Diagram b) manual solution Company B currently has $150,000 liquid assets (available now) for operational expenses. It spends $25,000 in year 1 and $30,000 in year 2. What uniform annual amount can the company spend in the next 5 years to deplete the entire budget? The interest rate is 8%.arrow_forward
- Hospitality Enterprises is planning to build a new 112 room inn in Martin. The initial cost of land leases and construction is anticipated to be $3.4 million. The annual operating and maintenance costs are expected to average $25,000 for the 20-year life of the inn. Every 4 years the interior of the inn must be painted at a cost of $15,000. The exterior must be painted and refurbished every 5 years at a cost of $60,000. The carpet and fur- niture must be replaced every 6 years at a cost of $100,000. Every 8 years $80,000 will be spent on paving and striping the parking areas. The inn will have a net demolition cost of $100,000 at the end of its life. If the MARR for Hospitality is 5%, determine the EUAC for the inn. Contributed by Ed Wheeler, University of Tennessee at Martinarrow_forwardA car’s warranty is 3 years. Upon expiration, annual maintenance starts at $150 and then climbs $25 per year until the car is sold at the end of Year 7. Use a 10% interest rate and find the present worth of these expenses.arrow_forward$1000 is deposited into a 9% account today. At the end of 2 yr, another $3000 will be deposited. In 5 yr, a $4000 purchase will be made. Approximately how much will be left in the account 1 yr after the purchase?arrow_forward
- What amount invested in a savings account that pays 8% interest annually is ?worth $215,892.50 after 1O yearsarrow_forwardAmanda and Blake have found a house, which owing to a depressed real estate market costs only $201,500. They will put $22,000 down and finance the remainder with a 30-year mortgage loan at 3% interest (compounded monthly). (a) How much is their monthly loan payment? (b) How much interest will they pay in the second payment? (c) They will also have the following expenses: property taxes of $2100, homeowners’ insurance of $1625, and $290 mortgage insurance (in case one of them dies before the loan is repaid, a requirement of the bank). These annual amounts are paid in 12 installments and added to the loan payment. What is their full monthly cost? (d) If they can afford $1200 per month, can Amanda and Blake afford this house?arrow_forwardriginal price 3. Five years ago, Mary opened a savings account for a condo on the beach that earns 2.6% simple interest each year. She started the account with $550 and has not touched the account since. How much money is in the account now?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