Part a & b PART A.) A company is considering the purchase of a piece of equipment for $78,100. Ifinstead the company waits 3 years the machine appreciates in value at 5% per year interest.How much money does the company have to save per year, to afford the equipment in Year 3?PART B.) George is loaned $100,000 in Year 0. Approximately (round up to the nearest year)many years will it take him to pay off the loan at 4% interest if he pays down the loan by$10,000 in Year 1 and increases his payment by $1,000 in each year starting in Year 2?PART C.) In planning for your retirement, you expect to save $5,000 in year 1, $6,000 in year2, and amounts increasing by $1,000 each year through year 20. If your investments earn 7%interest per year, what is your retirement account worth at year 20?

Answered: PART A.) A company is considering the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Part a & b

PART A.) A company is considering the purchase of a piece of equipment for $78,100. If
instead the company waits 3 years the machine appreciates in value at 5% per year interest.
How much money does the company have to save per year, to afford the equipment in Year 3?
PART B.) George is loaned $100,000 in Year 0. Approximately (round up to the nearest year)
many years will it take him to pay off the loan at 4% interest if he pays down the loan by
$10,000 in Year 1 and increases his payment by $1,000 in each year starting in Year 2?
PART C.) In planning for your retirement, you expect to save $5,000 in year 1, $6,000 in year
2, and amounts increasing by $1,000 each year through year 20. If your investments earn 7%
interest per year, what is your retirement account worth at year 20?

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An annuity present value computation helps to determine how much will be required to save for the future fund accumulation at a specific interest rate.

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