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- A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?You plan to make a lump-sum deposit of $5000 now into an investment account that pays 6% per year, and you plan to withdraw an equal end-of-year amount of $1000 for 5 years, starting next year. At the end of the sixth year, you plan to close your account by withdrawing the re- maining money. Define the engineering economy symbols involved.Starting next year you plan to deposit $1000 each year into an account earning 9.25% effective annual return. How many years will it take for your account to grow to $20,000, if you increase your deposit each year by 5%? (Hint: use excel goal seek).
- You run a business and are considering offeringa new service. If you offer the new service, youexpect it to generate $60,000 in profits each yearfor your business over the next two years. In orderto offer the new service, you will need to take outa loan for new equipment. Assume a 5 percentannual interest rate. A student plans to enroll at the university and plans to continue there until earning a PhD degree (a total time of 9 years). If the tuition for the first 4 years will be $7,200 per year and it increases by 5% per year for the next 5 years, what is the present worth of the tuition cost at an interest rate of 8% per year?A local University is planning to invest $500,000 every 3 months in an investment which earns interest at the rate of 15% per year compounded annually. The first investment will be at the end of this current quart. To what sum will the investment grow at the end of 5 years?How much interest will be earned during this period?
- French Fried Food Inc. wishes to accumulate P500,000 during the next 24 months to open a second location. What constant amount should it pay at the end of each month into a money market savings account with an investment dealer, to attain its saving objectives? The planning assumption is that the account will earn 10% compounded semi-annually. Find the present value of an annuity which pays P1,460 at the end of every 3 months of 6 years, if money is worth 9% compounded monthly? If P2,000 is invested at the end of every year at 8% compounded semi-annually, what will be the total value of the periodic investment after 20 years?To pay for university, you have just taken out a $1000 government loan that makes you pay $126 per year for 25 years. Calculate the yield to maturity if you start making payments exactly one year from now. If you start making these payments after your graduation, i.e. exactly three years from now,you're opening a business, for the next three years in return for an up front payment of 10,000. You figure it will cost you $4,000 a year in supplies. what is the internal rate of return IRR?
- It is likely that plane tickets will increase 6.5% in each of the next three years. The cost of the plane ticket at the end of the first year will be $150. How much money would need to be placed in a savings account now to have money to pay a student's travel home at the end of each year for the next 3 years? Assume savings account pay 8% annual interest.You have just completed your bachelor’s degree in business and applied for a job with a local bank. As part of its evaluation process, you must take an examination on time value of money analysis covering the following questions: A. What’s the future value of $1200 after 3 years if it earns 10%, annual compounding? What is the present value of $1200 to be received in 3 years if the interest rate is 10%, annual compounding? What annual interest rate would cause $1000 to grow to $1250 in 3 years? B. What’s the difference between an ordinary annuity and an annuity due? What is the future value of a 3-year, $1000 ordinary annuity if the annual interest rate is 10%? What is its present value? What would…You can purchase an equipment for $4,000. The equipment will provide benefits worth $900 a year. The expected life of the equipment is 8 years. It is expected that the price of the equipment will decrease by 15% per year. If the discount rate is 12%, would you buy the equipment today or will wait to purchase? When is the best time to purchase it? give excel file solution
