Discussion 2-1

At the beginning of Year 1 Timmy purchased a 200-acre farm in Oldham County, Texas. He immediately proceeded to begin growing crops for sale. He irrigates his crops using water from the Ogallala formation.   At the time of purchase, Timmy was advised by a qualified hydrologist that there were approximately 200,000,000 cubic meters of recoverable Ogallala water under his farm. On the basis of this report Timmy, on your advice, allocated $6 million of his $20 million purchase price to the water.   At the very beginning of Year 2 the hydrologist came back and estimated that as of that time there remained 194,000,000 cubic meters of recoverable water under Timmy’s farm. Calculate and explain Timmy’s Year 1 cost depletion deduction.   ReplyForward

What is the Present Worth of $2,000 costs in year one, increaing by $500 per year for years 2 through 6. The interest rate is 12% per year. Note : You must show a cash flow diagram, factor- ntation equations, and a solution)

To attract new customers, EP Employees Credit Union advertised that they will begin paying 3% interest every quarter on all savings accounts. (Their competitors pay interest every 6 months.) The credit union uses March 31st, June 30th, September 30th, and December 31st as quarterly interest periods. Determine (a) the end-of period totals in the account, and (b) the interest paid each quarter on the total. Assume there are no withdrawals and that quarterly interest is not redeposited. Month Deposit, $ Jan 50 Feb 70 Mar 0 Apr 120 May 20 June 0 July 150 Aug 90 Sept 0 Oct 40 Nov 110 Dec 0

For the factor (F∕P,10%,43), find the percent difference between the interpolated and formula-calculated values, assuming the formula-calculated value is the correct one.

A small company heats its building and spends $8,000 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 10% per year starting one year from now (i.e., the first cash flow is $8,800 at EOY one). Their maintenance on the gas furnace is $345 per year, and this expense is expected to increase by 15% per year starting one year from now (i.e., the first cash flow for this expense is $396.75 at the EOY one). If the planning horizon is 15 years, what is the total annual equivalent expense for operating and maintaining the furnace? The interest rate is 18% per year. Click the loon to view the interest and annuity table for discrete compounding when/= 10% per year. Click the icon to view the interest and annuity table for discrete compounding when /= 15% per year. Click the icon to view the interest and annuity table for discrete compounding when /= 18% per year. The total annual equivalent expense for operating and maintaining the furnace is $ thousands.…

Jennifer and Rex both receive a dividend from their 401(k) retirement plan every 6 months. The earning rates for this year have been 5% per year, compounded quarterly for Jennifer, and 4.85% per year, compounded monthly for Rex. Rex felt good about this because he knew the monthly compounding on his plan would make his APY higher than Jennifer’s APY. (a) Is Rex correct? Explain your answer. (b) What is the effective rate for each plan on the basis of the payment period?

For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. Company C wants to start saving money for replacement of network servers. If the company invests $100,000 at the end of year 1 but decreases the amount invested by 5% each year, how much will be available 5 years from now at an earning rate of 10% per year?

You are offered a 15-year investment and ask to select your preferred terms of interest which of the following is the most profitable option if the interest rate is 8% per year. (a) continuously. (b) annually, (c) semi-annually, (d) quarterly, (e) monthly, (f) daily.   SHOW YOUR COMPLETE SOLUTION, 4 DECIMAL PLACES ONLY

Are all the cash flows estimated in actual dollars?

You are planning to make 18 monthly withdrawals beginning at the end of the sixth month. You plan to withdraw $113 in the sixth month and increase your withdrawals by $17 over the previous month’s withdrawal. How much should you deposit now in a bank account that pays 12% per year compounded monthly?  Hint: Determine m and k and use the decision tree to find how you must setup the cash flow equation. Remember to bring all the cash flows to the proper time period required to answer this question.

Peter got a 8-year assignment in Argentina. Consequently, he will rent out his three-bedroom house in Hancock to an old friend, and given their friendship, Peter only requires end of the year payments (thus no monthly pmts) to be deposited in a savings account created solely for this purpose. Rental income will be 13,709 dollars per year but maintenance/repair costs will be 503 dollars in the first year and thereafter increase by 213 dollars per year. The tenant will be doing the maintenance/repair operations and therefore, at the end of each year, deposits the annual rent amount net of maintenance costs. Compute how much money will Peter have in his savings account upon his return (8 years from now) given that the proxy interest rate is 7% per year, compounded annually. (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas)

Hi! help me please this topic is under of Engineering Economy. Thank you and God bless!

I borrowed $25,000 with an add-on rate, 4% for two years and I have to make weekly payments. Using this information, determine the amount of weekly instalment I will be making. a) Between $234 and $245 b) None of the answers is correct c) Between $254 and $265 d) Between $334 and $345 e) Between $354 and $365

A small company heats its building and spends $8,800 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 9% per year starting one year from now (i.e., the first cash flow is $9,592 at EOY one). Their maintenance on the gas furnace is $355 per year, and this expense is expected to increase by 12% per year starting one year from now (i.e. the first cash flow for this expense is $397.60 at the EOY one). If the planning horizon is 14 years, what is the total annual equivalent expense for operating and maintaining the furnace? The interest rate is 15% per year. Click the icon to view the interest and annuity table for discrete compounding when /- 0% per year. Click the icon to view the interest and annuity table for discrete compounding when /-12% per year. Click the icon to view the interest and annuity table for discrete compounding when / 15% per year. CORD The total annual equivalent expense for operating and maintaining the fumace is $thousands…

What lump-sum amount of interest will be paid on a P500,000 loan that was made on August 1, 2012, and repaid on November 1, 2016, with simple interest at 10% per year?

Yvonne’s father was a true believer in “giving back.” He endowed a program 35 years ago to help students receive degrees when they are short on funds. If Yvonne wants to start her own scholarship fund that generates $10,000 annually starting next year, what is the amount she must contribute if earnings remain at 10% per year? The amount she must contribute if earnings remain at 10% per year is $X

ABC university tuition fees can be paid by on-time payment (pay total amount due when classes start at the cost of 90,000 pesos per year) or early-bird payment (pay total amount due 1 year in advance with a 10% discount). What is the amount of the savings compared to the on-time payment at the time that the on-time payment is made?

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Please solve the problem in the picture and solve everything by hand please, draw a cashflow too please. Thank you for your help.

Identify the engineering economy symbols and their values. Use a question mark with the symbol whose value is to be determined. Fifteen years ago your grandfather invested $18,000 in a stock fund to pay for your college education. Each year thereafter, he deposited $2,600 into the fund. If the investments grew at a rate of 8% per year over the 15 years, how much is in the fund now?   $18,000 =                  (Click to select) n A i F P $2,600 =                  (Click to select) F i A n P 0.08 =                  (Click to select) P n i A F 15 =                  (Click to select) n P i A F ? =                  (Click to select) P n i A F

Solve without using Excel (economics factor table is okay) LandMING has borrowed $8 Million to implement a new production line in its Dallas metal plant. If the interest rate on the loan is 10% per year (on unrecovered balance) for 5 years, what is the amount of interest payable for year 2?

What is the true effective annual rate of a credit card plan that charges 1.5% per month on an unpaid balance?

Commercial You are a corporate account officer with the Commercial & In-    dustrial Bank Corporation (CIBC). One of your major manufacturing clients, who are re- tooling one of their factories, just bought a piece of customized machinery to be delivered in six months’ time. The company’s treasurer intends to initially finance the purchase in the short-term loan market for six months and inquires about the possibilities of locking in the borrowing cost now. The amount is USD 10m and the loan would be disbursed in a six months from now to be repaid in exactly one year’s time from now. The current SOFR term structure is as follows: Maturity (D) SOFR Rate (%) 30 0.15% 90 0.24% 180 0.33% 360 0.55%   Use excel to calculate Define and calculate the SOFR forward Why or why not is it a good predictor for future SOFR rates? At expiration, e., six months after entering into the agreement, the 180D 20 SOFR stands at  0.90%. Who  wins  and  who  loses?…

What lump-sum amount of interest will be paid on a $20,000 loan that was made on May 1, 2020, and repaid on August 1, 2020, with ordinary simple interest at 10% per year?

State the purpose for each of the following built-in spreadsheet functions:a. FV(i%,n,A,P)b. IRR(first_cell:last_cell)c. PMT(i%,n,P,F)d. PV(i%,n,A,F)

An electronic device is available that will reduce this year’s labor cost by$16901.The equipment is expected to last for eight years. If labor cost increase at an average rate of 7% per year at interest rate is 12% compounded bimonthly. What is the maximum amount that we could justify spending for the device? Note:   use interest rate with five decimal places.

Q3 Please solve with hand by calculation using formulas (not in excel)