ENGINEERING ECONOMY
ENGINEERING ECONOMY
8th Edition
ISBN: 9781260606966
Author: Blank
Publisher: MCG
Question
Chapter 1, Problem 58APQ
To determine

Calculate the interest rate.

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During recessionary periods, bonds that were issued many years ago have a higher coupon rate than currently issued bonds. Therefore, they may sell at a premium, a price higher than their face value, because of currently low coupon rates. A $50,000 bond that was issued 15 years ago is for sale for $60,000. What rate of return per year will a purchaser make if the bond coupon rate is 14% per year, payable annually, and the bond is due 5 years from now? Write the ROR equation and use a single-cell spreadsheet function to display the correct answer directly.
A plaintiff in a successful lawsuit was awarded a judgment of $4800 per month for 5 years. The plaintiff has the need of a fairly large sum of money immediately for an investment of his own, and has offered the defendant the opportunity to pay off the award in a lump-sum amount of $110,000. If the defendant accepts the offer and pays the $110,000 now, what rate of return will the defendant have made by not paying the 60 monthly amounts?
An alternative for producing a pesticide will have a first cost of $400,000 and annual costs of $40,000. Income is expected to be $120,000 per year. What is the payback period at 6% per year interest?
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  • The production of polyamide from raw materials of plant origin, such as castor oil, requires 20% less fossil fuel than conventional production methods.Darvon Chemicals borrowed $6 million to implement the process. If the interest rate on the loan is 10% per year for 10 years, what is the amount of interest for year 2?
    Three neighboring counties in a state have agreed to pool tax resources already designated for county-maintained bridge refurbishment. At a recent meeting, the county engineers estimated that a total of $500,000 will be deposited at the end of next year into an account for the repair of old and safety-questionable bridges throughout the three-county area. Further, they estimate that the deposits will increase by $100,000 per year for 9 years thereafter, and then cease. At an interest rate of 5% per year, find the equivalent annual worth (AW) of the repair costs. a.$ 536,670 b.$ 909,910 c.$ 909,190 d.$ 536,760
    Three neighboring counties in a state have agreed to pool tax resources already designated for county-maintained bridge refurbishment. At a recent meeting, the county engineers estimated that a total of $500,000 will be deposited at the end of next year into an account for the repair of old and safety-questionable bridges throughout the three-county area. Further, they estimate that the deposits will increase by $100,000 per year for 9 years thereafter, and then cease. At an interest rate of 5% per year, find the equivalent present worth (PW) of the repair costs. a.$ 7,206,050 b.$ 7,026,050 c.$3,815,270 d.$ 8,315,270
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