ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Chapter 7, Problem 38P
To determine
The calculation of effective interest rate.
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You are saving up for a down payment on a house. You will deposit $600 a month for the next 24 months in a money market fund. How much will you have for your down payment in 24 months if the fund earns 12% APR compounded monthly?
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INCLUDE THE CASH FLOW DIAGRAM OF THIS PROBLEM AND ROUND OFF INTEREST RATE TO 5 DECIMAL PLACES AND YOUR FINAL ANSWER TO 2 DECIMAL PLACES.
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
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- Assume that your father is now 50 years old and plans to retire after 10 years from now. He is expected to live for another 25 years after retirement. He wants a fixed retirement income of Rs. 5,00,000 per annum. His retirement income will begin the day he retires, 10 years from today, and then he will get 24 additional payments annually. Your father has current savings of Rs. 10,00,000 and he expects to earn a return on his savings @ 10% p.a., annually compounding. How much (to the nearest of rupee) must your father save during each of next 10 years to meet his retirement goal?arrow_forwardA man paid 10% down payment of P2, 000,000 for a house and lot. If the rate of interest is 15% compounded monthly a. He fails to pay the monthly installment for the first three years and decides to pay his present and future obligations at the end of the 3rd year. What single amount must he pay to cancel his entire obligation at the end of the 3rd year?arrow_forwardToday you borrow $10,000 to pay for your expected college costs over the next four years, including a master’s degree. Two years from now, you determine that you need an additional $4,000 so you borrow this additional amount. Starting four years from the original loan (two years from the second loan), you begin to repay your combined debt by making annual payments of $2,880. You will make these payments for 10 years. Draw a cash flow diagram of this situation from your perspective.arrow_forward
- Suppose that the parents of a young child decide to make annual deposits into a savings account, with first deposit being made on the child’s fifth birthday and the last deposit on the fifteenth birthday. Then starting on the child’s eighteenth birthday up to his 22nd birthday, withdrawals of P100,000 ever years are to be made. If the interest rate is 8% compounded continuously, what are the annual deposits in years five through fifteen? with a cash flow diagramarrow_forwardThe accumulated amount of 40,454.3Pesos is from a 5 year annuity account that requires to pay 6,000Pesos at the end of each year. What is the interest rate if the account is compounded annually? * 15% 12% 8% 20%arrow_forwardYour goal again is to accumulate a million dollars in the next thirty years, this time on a monthly investment plan. The interest rate is again 12 percent (nominal) compounded monthly, how much should you invest every month!?arrow_forward
- An equipment can be bought on installment basis with 24 monthly payments of P3,440, each payable at the beginning of each period. If interest is 12% compounded monthly, what is the cash price of the equipment?arrow_forwardAn investor (owner) has an option to purchase a tract of land that will be worth $10,000 in six years. If the value of the land increases at 8% each year, how much should the investor be willing to pay now for this property?arrow_forwardFive annual deposits of P2,300 were made at the beginning of each year in an account that pays7% compounding semi-annually.a. What will be the accumulated amount at the end of five years?b. What is the present worth of the deposits?arrow_forward
- Aurora wants to give her daughter Mara a financial gift on the latter’s college graduation two years from now. Aurora came across a promotional high-yielding savings account which guaranteed that a deposit of P2,000 today becomes P5,000 during the same period. What is the interest rate in this case if it is compounded quarterly?arrow_forwardA person buys a piece of lot for P 100,000 down payment and 10 deferred semi-annual payments of P 8,000 each, starting three years from now. What is the present value of the investmentif the rate of interest is 12% compounded semi-annually? A. P 142,999.08 B. P 143,104.89 C. P 142,189.67 D. P 143,999.08arrow_forward6. Determine the accumulated amounts after 5 years of P1,000.00 invested at the rate of 10% compounded daily? 1,628.90 1,648.61 1,645.31 8. What is the effective rate of interestof P500.00 to be four times its value if invested at the rate of 10% compounded semiannually? 11.30% 10.25% 5.18%arrow_forward
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