Question

475 Fred is evalaating whether a more efficient monon with a life of 5 years should be insalled on an assembly line. If the interest rate is 10%. what is the present value of the energy savings (a) Energy savings are estimated at $4000 for the first year,then increasing by 7%-anually (b) What if the energy savings are increasing by 12% annually? 438 An engineering student bought acar ata local wed car lot. Including tax and insurance, the sotaill price was $15,000. He is to pay for the car in 13 equal monthly payments, beginning with the first pay- ment immediately (the first payment is the down payment). Nominal interest on the loan is 12,com- pounded monthly. After six payments he decides to sell the car. A buyer agrees to pay off the loan in full and to pay the engineering student $2000. If there are no penalty charges for this carly payment of the loan, how much will the car cost the new buyer? 4-34 Jerry bought a house for $400,000 and made an for the remaining amount. Payments were made monthly. The nominal annual interest rate was 6%. After 10 years (120 payments) he sold the house and paid off the loan's remaining balance. (a) What was his monthly loan payment? (b) What must he have paid (in addition to his regular 120h monthly payment) to pay offi the loan? 4-59 Perry is a freshman. He estimates that the cost of tuition, books, room and board, transportation, and other incidentals will be $21,000 this year. He expects these costs to rise about $1500 each year while he is in college. If it will take him 5 years to earn his BS, what is the present cost of his degree at an interest rate of 4%? If he earns an extra S1 5,000 annually for 40 years, what is the present worth of his degree? Contributed by Paul R. McCright, University of South Florida 4-90 In the 1500s King Henry VIII borrowed money from his bankers on the condition that he pay 5% of the loan at each fair (there were four fairs per year) until he had made 40 payments. At that time the loan would be considered repaid. What effective annual interest did King Henry pay?

Answer 1