EGG 307 HW 4

EGG 307 HW 4 - instead of 18%. Solutions: 4-74 A = $500 +...

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EGG 307: Engineering Economics Spring 2009 Sample solutions to Homework No. 4: Problems : 4-74; 4-81; 4-85; 4-96. Notes: 1. For Problem 4-74 Additional question : Repeat the problem for the following modified cash flows with the same 1 st and 2 nd year payments, i.e., 1 st year $500, 2 nd year also $500, 3 rd year 600, 4 th year $700, and so on up to 20 years. 2. For Problem 4-85 (i) Hint : The total period of analysis is 6 years, i.e., this year plus 5 more years (ii) Additional question : Repeat the problem using a cost of capital (i.e., interest rate) of 8%,
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Unformatted text preview: instead of 18%. Solutions: 4-74 A = $500 + $100(A/G, 8%, 20) = $1,203.69 For the modified cash flows, A = $500 + $100(F/G, 8%, 19)(A/F, 8%, 20) = $1,113.13 The annual deposits should be $437.14 4-85 ) . . ( ) . . ( , ) ) i ( ) g ( ( ) g i ( A P N N 6 6 1 18 1 08 1 1 08 18 000 175 1 1 1 = + + = = $721,371 You can afford to spend as much as $721,371 for a higher quality heat exchanger. However, if i = g = 8% ) . ( , ) i ( N A P 08 1 6 000 175 1 1 + = + = = $972,220...
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