ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 36P
To determine
Effective interest rate which investor will receive and what other effective annual interest rate paid by the company.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Given Problem:
A motorcycle parts shop borrowed 10,098.01 from Francois’ Lending on Mar. 1, 2018 and 7,468.53 on Mar. 1, 2020. Jones Corporation made a partial payment of P7, 000 on Mar. 1, 2021. It was agreed that the balance of the loan would be amortizes by two payments one of Mar. 1, 2022 and the other on Mar. 1, 2023, the second being 25% larger than the first. If the interest rate is 0.067. What is the amount of the last payment?
A(n)
16-year
bond has a coupon of
6%
and is priced to yield
13%.
Calculate the price per $1,000 par value using semi-annual compounding. If an investor purchases this bond two months before a scheduled coupon payment, how much accrued interest must be paid to the seller?
The price of the bond,
PV,
is
$nothing.
(Round to the nearest cent.)
a) Find the Future Value of an annuity for$1000 paid at the end of each year for 3 years assuming interest is compounded annually at 7%?
b) Julie Miller will receive the set of cash flows below. What is the Present Value at a discount rate of 10%. Year one 500, year two 500, year three 300, year four 300 and year five 150.
c) Perpetuity has no time limit. The present value of $100 perpetuity discounted at 15% is?
Chapter 7 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 7 - Prob. 1QTCCh. 7 - Prob. 2QTCCh. 7 - Prob. 3QTCCh. 7 - Prob. 4QTCCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6P
Ch. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Prob. 47PCh. 7 - Prob. 49PCh. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57PCh. 7 - Prob. 58PCh. 7 - Prob. 59PCh. 7 - Prob. 60PCh. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - Prob. 64PCh. 7 - Prob. 65PCh. 7 - Prob. 66PCh. 7 - Prob. 67PCh. 7 - Prob. 68PCh. 7 - Prob. 69PCh. 7 - Prob. 70PCh. 7 - Prob. 71PCh. 7 - Prob. 72PCh. 7 - Prob. 73PCh. 7 - Prob. 74PCh. 7 - Prob. 75PCh. 7 - Prob. 76PCh. 7 - Prob. 77PCh. 7 - Prob. 78PCh. 7 - Prob. 79PCh. 7 - Prob. 80PCh. 7 - Prob. 81PCh. 7 - Prob. 82PCh. 7 - Prob. 83PCh. 7 - Prob. 84PCh. 7 - Prob. 85PCh. 7 - Prob. 87PCh. 7 - Prob. 88PCh. 7 - Prob. 89P
Knowledge Booster
Similar questions
- Mrs. Cruz who is just 30 years old is planning for her retired life. She plans to invest an equal sum of P 7000 at the end of every year for the next 30 years starting from the end of next year. The bank gives 11% interest rate, compounded annually. Find the value of his account when he is 60 years old. a. P 60, 856.55 b. P 578,907.45 c. P 90, 896.67 d. P 1, 393,146.15arrow_forwardTrue or False 1. For any economy study based on our discussions, it is always necessary to determine the profit to evaluate thebetter/best alternative.2. If simple interest is evaluated, then the interest obtained will always be directly proportional to the number of years assuming that a constant interest rate is used throughout these years.arrow_forwardMaintenance cost for small bridge with an expected 50 year life are estimated to be $15,000 each year for the first 9 years, followed by a $20,000 expenditure in the year 15 and a $30,000 expenditure in the year 33. If interest rate is at 10% compounded monthly. What is the equivalent present value of the entire maintenance cost of that bridge?What is the equivalent uniform annual cost over the entire-50 year period?arrow_forward
- A student takes out a $10,000, 10-year loan with two possible repayment plans, (i) immediate repayment or (ii) a grace period during the college years. The student takes 5 years to graduate. The interest rate is 8%, compounded annually and the loan is paid off as a yearly lump sum. Since the bank is a for-profit business (beholden to its shareholders and required to maximize profit), the bank intends to receive the same return on this loan either way. How much are the annual payments under option (i) and option (ii)arrow_forward5. A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,000 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 for the first year, P150,000 the second year, P180,000 the third year P200,000 each year for the next 2 years, all payments being made at the beginning of each year. If money is worth 12% compounded annually, which bid should the owner of the plant accept? Show cashflow diagram.arrow_forwardThe stock market has an average annual return of 10% per year. We will consider the annual return to be an annual interest rate Now suppose the stock market for the next 10 years has a strong growth rate. If you invested your $1400 stimulus check in the stock market with 16% annual interest, compounded annually, how much money would you have after 10 years?arrow_forward
- Question 888 M A mining company CEO wants to help provide college education for the daughter of a high performance underground worker. He can afford to invest $750/yr. for the next 4 years, beginning on the student’s fourth birthday. He wishes to give the future student $5,000 on her 18th, 19th, 20th, and 21st birthdays, for a total of $20,000. Assuming 6% interest, what uniform annual investment will he have to make on the girl’s 8th through 17th birthday? show all steps clearly Full explain this question and text typing work only thanksarrow_forwardA corporation issues 20-year $1,000 zero-coupon bonds. If you buy one of these bonds you will receive no interest checks during the 20 years, but will receive the $1,000 maturity value in 20 years. Based on a prevailing 7.5% annual rate, what price must you pay for one of the bonds?arrow_forward19 - What is the value of the compound interest rate applied to a capital of R$13,200.00, so that it becomes R$35,112.26, if the investment period is 7 months?arrow_forward
- A scientist is planning on purchasing a new microscope that will increase yearly profits for his firm by $7,500.00 each year starting at year one and continuing until year six. The microscope has a salvage value of $50,000.00 at year seven. If the initial cost of the microscope is $75, 000.00, what is the present worth of the investment at an interest rate of 8%? don't use ai answer,i will 5 upvotesarrow_forwardAbbott wants to increase their marketing for Pedialyte leading up to St. Patrick's Day this year. They launch a Superbowl ad on 2/13/2022, costing them $5,000,000, and they launch a secondary campaign in early March (3/6) costing $800,000. They expect to see sales starting at $500,000 on 2/20, increasing by 20% every week for 6 weeks. Assuming a MARR of 12%, what is the present value of this project at the start of the campaign if they stop attributing sales to this on 4/3/2022?O. $602,449O. $597437O. $563,446O. $321,998arrow_forwardAbbott wants to increase their marketing for Pedialyte leading up to St. Patrick's Day this year. They launch a Superbowl ad on 2/13/2022, costing them $5,000,000, and they launch a secondary campaign in early March (3/6) costing $800,000. They expect to see sales starting at $500,000 on 2/20, increasing by 20% every week for 6 weeks. Assuming a MARR of 12%, what is the present value of this project at the start of the campaign if they stop attributing sales to this on 4/3/2022? Group of answer choices $563,446 $602,449 $321,998 $597,437arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education