Homework Assignment #2

Homework Assignment #2 - Determine the uniform series of...

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MIME 2600 – Engineering Economics Homework Assignment #2 (50 points) Due on Wednesday 2/13 All problems assume compounding interest . Problem #1 (10 Points) For a principal value of $1000, determine: (a) the future value after 1 period for an interest rate of 2.5%. (b) the future value after 5 periods for an interest rate of 2.5%. (c) the interest rate necessary to produce a future value of $1500 after 6 periods. (d) the number of periods necessary to double the principal amount of money using an interest rate of 5%. Problem #2 (20 points) Solve for the present worth of each cash flow for an interest rate of 10%. (5 points each) 0 1 2 3 4 5 6 7 8 9 $200 $300 $400 0 1 2 3 4 5 6 7 8 9 $100 $150 (a) (b) 0 1 2 3 8 9 $50 $100 $75 4 5 6 7 (d) (c) 0 1 2 3 4 5 6 7 8 9 $175 $150 $125 $200
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Problem #3 (10 points) Determine the value in year 9 of each cash flow in problem 2. Problem #4 (10 points)
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Unformatted text preview: Determine the uniform series of payments that correspond to each condition and sketch a cash flow diagram. (a) A present worth of $500 with an interest rate of 10% and payments in periods 1 through 5. (b) A future value of $2000 in period 10 with an interest rate of 12% and payments in periods 1-10. (c) A future value of $5000 in period 10 with an interest rate of 5% and payments only in periods 1-8. Bonus Problem (5 points) Draw the cash flow diagram and solve for the present worth of the following cash flow using an interest rate of 5%. Period Cash Inflow Cash Outflow $500 $10,000 1 $1,000 $0 2 $2,000 $1,000 3 $3,000 $0 4 $4,000 $1,000 5 $3,000 $0 6 $2,000 $1,000 7 $1,000 $0 8 $1,000 $1,000 9 $1,000 $0 10 $2,000 $1,000 11 $3,000 $0 12 $4,000 $1,000 13 $3,000 $0 14 $2,000 $1,000 15 $1,000 $0...
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Homework Assignment #2 - Determine the uniform series of...

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