Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 8, Problem 18P

(a):

To determine

Calculate the total interest.

(b):

To determine

Calculate the Cost in 2009.

(c):

To determine

Calculate the estimated cost.

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1. XYZ company planned that $500,000 be spent on software and hardware to improve the efficiency of the database systems. This is expected to save $10,000 per year for 10 years in energy costs and $700,000 at the end of 10 years in equipment costs. a) Write the required equation for finding the rate of return by using factors. (You are not expected to find the rate of return value) b) Calculate the rate of return by using Excel.
Compute how much a business is worth if it is expected to generate cash flows to its owners of $0 for the next three years, $42,800 in three years, $60,000 in four years, then $85,000 per year for the subsequent U years (i.e., $85,000 per year after four years in the future and then continuing for the next U years until 4+U years into the future), and finally generates cash inflows to its owners of $100,000 per year thereafter forever (i.e., $100,000 forever after 4+U years), assuming that businesses with similar relevant risk have expected returns of 15%.  U=44
You are planning for retirement 34 years from now. You plan to invest $4,200 per year for the first 7 years, $6,900 per year for the next 11 years, and $14,500 per year for the following 16 years (assume all cash flows occur at the end of each year). If you believe you will earn an effective annual rate of return of 9.7%, what will your retirement investment be worth 34 years from now?
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