A manufacturing company spent $30,000 on a new conveyor belt. If the conveyor belt resulted in cost savings of $4200 per year, the length of time it would take for the company to recover its investment at 8% per year is closest to: (a) Less than 9 years(b) 9 to 10 years(c) 11 to 12…
You are told that the present worth of an increasing geometric gradient is $88,146. If the cash flow inyear 1 is $25,000 and the gradient increase is 18% per year, what is the value of n? The interest rate is 10% per year. Sample problems and notes are based on the following textbook: Engineering Economy…
If the value of Jane’s retirement portfolio increased from $170,000 to $813,000 over a 15-year period, with no deposits made to the account over that period, what annual rate of return did she make? Sample problems and notes are based on the following textbook: Engineering Economy 7th Edition ISBN-13: 978-0073376301 ISBN-10: 0073376302 Edition: 7 Author: Leland Blank, Anthony…
El Paso Water Utilities (EPWU) purchases surface water for treatment and distribution to EPWU customers from El Paso County Water Improvement District during the irrigation season. A new contract between the two entities resulted in a reduction in future price increases in the cost of water from 8% per year to 4% per year for…
Determine the difference in the present worth values of the following two commodity contracts at an interest rate of 8% per year. Contract 1 has a cost of $10,000 in year 1; costs will escalate at a rate of 4% per year for 10 years.Contract 2 has the same cost in year 1, but costs…
Apple Computer wants to have $2.1 billion available 5 years from now to finance the production of a handheld “electronic brain” that, based on your behavior, will learn how to control nearly all the electronic devices in your home, such as the thermostat, coffee pot, TV, and sprinkler system. The company expects to set aside…
Red Valve Co. of Carnegie, Pennsylvania, makes a control pinch valve that provides accurate, repeatable control of abrasive and corrosive slurries, outlasting gate, plug, ball, and even satellite-coated valves. How much can the company afford to spend now on new equipment in lieu of spending $75,000 four years from now? The company’s rate of return…
A family that won a $100,000 prize on America’s Funniest Home Videos decided to put one-half ofthe money in a college fund for their child who was responsible for the prize. If the fund earnedinterest at 6% per year, how much was in the account 14 years after it was started? Sample problems and notes…
The Moller Skycar M400 is a flying car known as a personal air vehicle (PAV) that is expected to be FAA-certified by December 31, 2011. The cost is $985,000, and a $100,000 deposit will hold one of the first 100 “cars.” Assume a buyer pays the $885,000 balance 3 years after making the $100,000 deposit….
To make CDs look more attractive than they really are, some banks advertise that their rates are higherthan their competitors’ rates; however, the fine print says that the rate is a simple interest rate. If a person deposits $10,000 at 10% per year simple interest, what compound interest rate would yield the same amount of…