Chapter 18, Problem 12RQ

A contractor bought a concrete mixer at ? 120,000 if paid in cash. The mixer may also be purchased by installment to be paid within 5 years. If money is worth 8% compounded annually, what is the amount of each annual payments made at the end of each year if paid in installment up to the end of 5 years?

You have just moved to a new country to take up a two-year assignment. You need to buy a car and are deciding between a new one that costs $20,000 and a three year-old one that costs $9,000. The used car has an odometer reading of 25,000 miles. You have $10,000 in savings, and can borrow the rest from your company, repaying them 110% after two years. The value of the new car will depreciate by 50% in two years, while that of the used car will depreciate by one-third. What should you do? Use the seven-step procedure to analyze your situation. Attached is the photo of the seven step procedure.

An engineer plans to retire in exactly one year and wants an account that will pay him ₱31,000 a year for the next 14 years. Assuming a 6% annual effective rate, what is the amount he would need to deposit now? (The fund will be depleted after 14 years). Find P

A contract has been signed to lease a building at P250,000 per year with an annual increase of P2,500 for 10 years. Payments are to be made at the end of each year starting 1 year from now. The prevailing interest rate is 8%. What lump sum paid today would be equivalent to the 10-year lease-payment plan? Kindly solve this Engineering economy problem. Thank you

Your future company has purchased a machine and has entered into a contract that requires the company to pay $2000 each year for the upgrade of machine components at the end of years 6, 7, and 8. In anticipation of the upgrade cost, your company has decided to deposit equal amounts ( X ) at the end of each year for five years in a row in an account that pays i = 6% . The first deposit is made at the end of the first year. What is the value of X?

Company B has a P5M loan for a new security system it just bought. The annual payment is P444,000 and the interest rate is 8% per year for 30 years. Your company decides that it can afford to pay P500,000 per year. After how many payments (years) will the loan be paid off?

Show complete solution with cash flow diagram.The annual income from a rented house is $12.000. The annual expenses are $3000. If the house can be sold for $145,000 at the end of 10 years, how much could you afford to pay for it now, if you considered 18% to be a suitable interest rate?

A company plans to set aside $50,000 per year beginning 1 year from now for replacing equipment 6 years from now. What will be the purchasing power (in terms of current-value dollars) of thr amount accumulated, if the investment grows by 10% per year, but inflation averages 4% per year.

An employee is earning $ 18,000 a month and he can only afford to purchase a car which will require a down payment of $ 80,000 and a monthly amortization of 30% of his monthly salary. What would be the maximum cash value of a car he can purchase if the seller will agree to a down payment of $ 80,000 and the balance payable in four years at 12% per year payable in monthly basis. The first payment will be due at the beginning of the first month. Include cashflow diagram and formulas.