EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 8220101336736
Author: Park
Publisher: PEARSON
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Chapter 3, Problem 21P
To determine
Calculate the present value.
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You consider paying equal amounts of money into a bank account at regular intervals for 10 years. As a result of your research, you find out the following payment plans:a. To pay $500 at the end of each month for a period of 10 years with an interest rate 12% compounded monthly.b. To deposit $1500 at the end of every three months with an interest rate of 12% compounded continuously for 10 years.c. To deposit $1000 at the end of every two months with an interest rate 12% compounded quarterly for 10 years.For each of these payment plans, calculate the amount of money that will be accumulated in your account at the end of the 10th year (including the last payment). Which alternative would be more advantageous for you?
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8. Compound Interest
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Chapter 3 Solutions
EBK CONTEMPORARY ENGINEERING ECONOMICS
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - Prob. 8PCh. 3 - Prob. 9PCh. 3 - Prob. 10P
Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39PCh. 3 - Prob. 40PCh. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Prob. 43PCh. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Prob. 47PCh. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58PCh. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Prob. 61PCh. 3 - Prob. 62PCh. 3 - Prob. 63PCh. 3 - Prob. 64PCh. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68PCh. 3 - Prob. 69PCh. 3 - Prob. 70PCh. 3 - Prob. 71PCh. 3 - Prob. 72PCh. 3 - Prob. 1STCh. 3 - Prob. 2STCh. 3 - Prob. 3ST
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- Suppose that, to cover some of your college expenses, you are obtaining a personal loan form your uncle to be repaid in three years. If your uncle always earns 10% interest (compounded monthly) on his money invested in various sources and you paid him $20,223. What was the principal amount of the loan?arrow_forwardGeorgi Rostov deposits $15,000 in a savings account that pays 6% interest compounded monthly. Three years later, he deposits $14,000. Two years later after the $14,000 deposit, he makes another deposit in the amount of $12,500. Four years after the $12,500 deposit, half of the accumulated funds is transferred to a fund that pays 8% interest compounded quarterly. How much money will be in each account six years after the transfer?arrow_forwardWhat is the equivalent of a current deposit of $32,000.15 years from now at 8.5% interest compounded annually? $101,510 $108,792 $98,008 $105,443arrow_forward
- A debt of P 15,000 was paid for as follows: P 4,000 at the end of 3 months, P 5,000 at the end of 12 months, P 3,000 at the end of 15 months, and a final payment F at the end of 21 months. If the rate of interest was 18% compounded quarterly, find the final payment F.arrow_forwardIndicate whether the given statements is true (T) or false (F): "Suppose that a lump sum of $1,000 is invested at r = 10% for eight years. The future equivalent is greater for daily compounding than it is for continuous compounding".arrow_forwardAssuming I deposit my signing bonus of $36,000 at 9% APR, compounded annually, how much will I have upon retirement in 20 years?arrow_forward
- Jack borrowed $10,000 from Mr. Jill on July 11, 2018 and promised to pay it by December 21, 2018. How much should Jack pay if the rate of simple interest is 15%, compounded annually.arrow_forwardWhat are the present worth and the accumulated amount of a 12 year annuity paying Php 12,000 at the end of each year, with interest at 12% compounded annually? P = Php 76,332.491, F = Php 300,597.599 P = Php 74,332.491, F = Php 289,597.599 P = Php 75,332.491, F = Php 279,597.599 P = Php 80,332.491, F = Php 278,597.599arrow_forwardFirst City Bank pays 9 percent simple interest on its savings account balances, whereas Second City Bank pays 9 percent interest compounded annually If you made a deposit of $7,500 in each bank, how much more money would you earn from your Second City Bank account at the end of eight years?arrow_forward
- A large bank has increased its annual percentage rate (APR) on credit cards to 30%. This move was necessary because of the “additional risks” faced by the bank in a weak economy. If monthly compounding is in effect, what is the effective annual interest rate being charged by the bank?arrow_forwardSolve the following, using interest at 7% compounded annually: a) What is the amount that will be accumulated in a sinking fund at the end of 15 years if $200 is deposited in the fund at the beginning of each of the 15 years if $200 is deposited in the fund at the beginning of each of the 15 years? b) Uniform deposits are to be made on January 1 of 1991, 1992, 1993, and 1994 into a fund that is intended to provide $1,000 on January 1 of 2005, 2006, and 2007. What must be the size of these deposits?arrow_forwardWhat interest rate compounded monthly is equivalent to 10% effective rate? I have clarifications about this problem, I asked it once and you given me r=9.5690%, which makes sense because the r variable is the one we are finding using this formula: EAR=((1+rn)^n)−1, but when I search to google the answer r=10.47% which also makes sense because they are using r=((1+i/n)^n)-1, which one is more accurate? thank youarrow_forward
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