Question 1 (5 points)
One plan to raise money for Texas schools involves an “enrichment tax” that could collect $56 for every student in a certain school district. If there are 50,000 students in the district and the cash flow begins 2 years from now, what is the present worth of the enrichment plan over a 5-year planning period at an interest rate of 8% per year?
Question 1 options:a)
$8.124 million
b)
$8.671 million
c)
$8.587 million
d)
$7.993 million
Question 2 (5 points)
How much money would you have to pay each year in 8 equal payments, starting 2 years from today, to repay a $20,000 loan received from a relative today, if the interest rate is 8% per year?
Question 2 options:a)
$3775.44
b)
$3800.95
c)
$3698.61
d)
$3758.62
Question 3 (5 points)
An industrial engineer is planning for his early retirement 25 years from now. He believes he can comfortably set aside $10,000 each year starting now. If he plans to start withdrawing money 1 year after he makes his last deposit (i.e., year 26), what uniform amount could he withdraw each year for 30 years, if the account earns interest at a rate of 8% per year?
Question 3 options:a)
$69,666
b)
$63,492
c)
$65,110
d)
$71,023
Question 4 (5 points)
Lifetime savings accounts, known as LSAs, would allow people to invest after-tax money without being taxed on any of the gains. If an engineer invests $10,000 now and $10,000 each year for the next 20 years, how much will be in the account immediately after the last deposit if the account grows by 15% per year?
Question 4 options:a)
F = $1,255,131
b)
F = $1,188,101
c)
F = $571,000
d)
F = $1,528,377
Question 5 (5 points)
By spending $10,000 now and $25,000 three years from now, a plating company can increase its income in years 4 through 10. At an interest rate of 12% per year, how much extra income per year would be needed in years 4 through 10 to recover the investment?
Question 5 options:a)
A = $6000.95
b)
A = $8556.42
c)
A = $10,978.39
d)
A = $18,655.42
Question 6 (5 points)
Compute the present worth (year 0) of the following cash flows at i = 12% per year.
Year
Amount, $
Year
Amount, $
0
5000
8
700
1–5
1000
9
600
6
900
10
500
7
800
11
400
Question 6 options:a)
P = $11,198
b)
P = $11,150
c)
P = $10,150
d)
P = $10,198
Question 7 (5 points)
When a uniform series begins at a time other than the end of period 1, it is called a ________ series.
Question 7 options:a)
automatic
b)
autonomous
c)
shifted
d)
uniform
Question 8 (5 points)
The present worth is always located __________ prior to the first uniform-series amount when using the P/A factor.
Question 8 options:a)
three periods
b)
zero periods
c)
two periods
d)
one period
Question 9 (5 points)
For an interest rate of 10% per year compounded quarterly, determine the number of times interest would be compounded
(a) per quarter,
(b) per year, and
(c) per 3 years.
Question 9 options:a)
(a) 12
(b) 4
(c) 1
b)
(a) 4
(b) 1
(c) 12
c)
(a) 1
(b) 4
(c) 6
d)
(a) 1
(b) 4
(c) 12
Question 10 (5 points)
An interest rate of 16% per year, compounded quarterly, is equivalent to what effective interest rate per year?
Question 10 options:a)
i = 16.59%
b)
i = 16.99%
c)
i = 16.89%
d)
i = 16.79%
Question 11 (5 points)
What effective interest rate per year is equivalent to an effective 18% per year, compounded semiannually?
Question 11 options:a)
18.0%
b)
18.1%
c)
18.7%
d)
18.3%
Question 12 (5 points)
Determine the P/G factor for 5 years at an effective interest rate of 6% per year, compounded semiannually.
Question 12 options:a)
7.9345
b)
4.9455
c)
4.2124
d)
1.8836
Question 13 (5 points)
A present sum of $5000 at an interest rate of 8% per year, compounded semiannually, is equivalent to how much money 8 years ago?
Question 13 options:a)
$$2669.50
b)
$2644.50
c)
$2691.25
d)
$2680.15
Question 14 (5 points)
A 40-day strike at Boeing resulted in 50 fewer deliveries of commercial jetliners at the end of the first quarter of 2000. At a cost of $20 million per plane, what was the equivalent end-of-year cost of the strike (i.e., end of fourth quarter) at an interest rate of 18% per year, compounded monthly?
Question 14 options:a)
$2.505 billion
b)
$1.209 billion
c)
$1.1434 billion
d)
$2.225 billion
Question 15 (5 points)
An engineer deposits $300 per month into a savings account that pays interest at a rate of 6% per year, compounded semiannually. How much will be in the account at the end of 15 years? Assume no interperiod compounding.
Question 15 options:a)
$77,575
b)
$79,992
c)
$85,636
d)
$82,086
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