(1):
Calculate value factor to the present value.
(1):
Explanation of Solution
Option (a):
Interest rate (i) is 18% and time period (n) is 33.
The
The future value factor to the present value is 244.545.
Option (b):
The future value factor to the present value (FP) through formula can be calculated as follows:
The future value factor to the present value is 235.5625.
(2):
Calculate annual growth rate.
(2):
Explanation of Solution
Option (a):
Interest rate (i) is 12% and time period (n) is 54.
The annual growth rate value (AG) through linear interpolate can be calculated as follows. The interest rate lies between (i1) 11% and (i2) 13%.
The annual growth factor value is 8.3356.
Option (b):
The annual growth factor value (AG) through formula can be calculated as follows:
The annual growth factor value is 8.2143.
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Chapter 2 Solutions
ENGINEERING ECONOMY DIGITAL ACCESS
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- A $10,000 loan amortized over 5 years at an interest rate of 10% per year requires payments of $2638 to completely remove the loan when interest is charged on the unrecovered balance of the principal. If interest is charged on the original principal instead of the unrecovered balance, what is the loan balance after 5 years, provided the same $2638 payments are made each year?arrow_forwardVision Technologies, Inc., is a small company that uses ultra-wideband technology to develop devices that can detect objects (including people) inside buildings, behind walls, or below ground. The company expects to spend $100,000 per year for labor and $125,000 per year for supplies for three years before a product can be marketed. At an interest rate of 15% per year, what is the total equivalent present worth of the company’s expenses?arrow_forwardThe annuity expressions and interest factors may only be used when the payment frequency is annual. a True b Falsearrow_forward
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