Question

1. A local car wash charges $3.00 per wash or the option of paying $12.95 for 5 washes, payable in advance with the first wash. If you normally washed your car once a month, would the option be worthwhile if your Minimum Attractive Rate of Return (MARR) is 29% compounded annually? 2. A person borrows $5,000 at an interest rate of 187 compounded monthly. Monthly payments of $180.76 are agreed upon. (a) What is the length of the loan? (Hint: It is an integral number of years. ) . (b) What is the total amount that would be required at the end of the sixth month 'to payott the entire balance? returns for a business for five years are as follows: $8.250; $12,600; $9,750; $11,450 and $14,500. of the money is 123, what is the equivalent uniform annual If the value benefit for the five-year period? is 12%, what 11, 450 and tears are as benefit for I have borrowed $1000 from the bank. The interest rate I am to pay is 20%, compounded monthly. I am to repay the loan by making 24 equal monthly payments. What is the amount of my monthly payments? Tony invested $15,000 in a high yield account. At the end of 30 years he closed the account and received $539,250. Compute the effective interest rate he received on the account. - A large bakery is considering three alternative investments for next year. They were identified by the processing engineering department to be important feasible projects that merit evaluation. They calculated they spent $5,600 in the last 6 months gathering the following information: Project A Project B Project C Dough-forming Improve Process Automation Equipment Packaging Cost of Equipment $80,400 $47,800 - $75,450 Installation Costs 25,000 Expected Annual 40,000 20,000 Savings Useful Life (years) 22,600 . 15,100 24,000 10 10 If MARR IS 12%, which alternative should be selected? Note: $5,600 is a sunk cost, not relevant for comparison

Answer 1

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