ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- A bond pays $1000 in 5 years an earns an annual interest rate of 2.75%. What is the bond's price? Assume annual compounding. Round your answer to two decimal places.arrow_forward1. Starting at the end of the present year (i.e., end of year 1), Meredith plans to deposit her annual bonuses into a savings account that pays 3% interest compounded quarterly. Her initial bonus is $5,000. This amount is expected to increase by $400 each successive year. Determine how much she will have in her account immediately after the sixth deposit.arrow_forward3.2 Compare the interest earned by $1,000 for five years at 8% simple interest with that earned by the same amount for five years at 8% compounded annually. 3.3 You are considering investing $3,000 at an interest rate of 8% compounded annu- ally for five years or investing the $3,000 at 9% per year simple interest for five years. Which option is better?arrow_forward
- Cory Manciagli is planning to retire in 20 years. Money can be deposited at 6% compounded quarterly. What quarterly deposit must be made at the end of each quarter until Cory retires so that he can make a withdrawal of $40,000 semiannually over the first 10 years of his retirement? Assume that his first withdrawal occurs at the end of six months after his retirement. (Hint: Apply concept of economic equivalence at the end of 20 years).arrow_forwardQ.2. How many years will it take to triple your investment of $5,000 if it has an interest rate of 10% compounded annually? Q.3. If you want to withdraw $10,000 at the end of two years and $20,000 at the end of four years, how much should you deposit now into an account that pays 10% interest compounded annually?arrow_forwardQ: You borrow $20,000 to be repaid in equal instalments over the following four years. The interest rate is 9%. Find the interest payment in the third year, I3.arrow_forward
- 1). You are going to buy a home, and will be taking out a home loan for $275,000. The loan will be a standard 30 year loan, compounded annually, with an APR of 8%. What is annual payment.arrow_forwardMaria deposits $1,300 in a savings account that pays interest at an annual compound rate of 4.0%. Two years after the deposit, the interest rate increases to 5.0% compounded annually. A second deposit of $2,700 is made immediately after the interest rate changes to 5.0%. How much will be in the fund 7 years after the second deposit? $ Round your final answer to 2 decimal places, e.g. 52.75. The cell tolerance is ±0.03arrow_forwardAn individual needs P 12,000 immediately as a down payment on a new appliance. Suppose that he can borrow this money from his insurance company. He must repay the loan in equal payments every six months over a period of 8 years. The nominal rate being charged is 7% compounded continuously. What is the amount of each payment? Select one: a. P 997 b. P 846 c. P 872 d. P 942*please do not use excelarrow_forward
- Now that young King Solomon has inherited the kingdom of Israel, and a massive amount of wealth that he can invest, he wants to plan for his "retirement." Since he doesn't know how long he'll live, and data on life expectancy is scarce, he reasons that he just wants a regular "cash flow" over the course of his life. With that in mind, how many shekels would he need to deposit at 20 percent interest compounded every year in order to be able to withdraw 50 shekels at the end of every year for seventy years?arrow_forwardFind the present value of $750 to be paid four years from now when the prevailing interest rate is 10 percent, if interest is compounded annually.arrow_forwardSuppose you think if you were to retire right now, you would have needed $50,000 each year to supplement your social security and maintain your desired lifestyle. But because there is on average 3% annual inflation, when you retire 30 years from now, you need more than $50,000 per year to maintain the lifestyle you like. How much will be equivalent to $50,000 at retirement time when adjusted for inflation? What will be the face value of the bond that yields the equivalent of $50,000, found in #4 of Part B in coupon payment? How much annual payment in the retirement account is needed to accumulate the amount needed to purchase the bond when retiring? What is the purchase power of the amount that will be received by your inheritors, measured in the current value of $ at the time of opening the retirement account? (Hint: First calculate what the future value will be in 30 years, which is equivalent to $50,000 now and then solve the rest of the problem).arrow_forward
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