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Unformatted text preview: IE 343A Engineering Economics Homework #2 Due date: Sep. 17 th 1. What lump-sum amount of interest will be paid on a $10,000 loan that was made on Aug. 1, 2008, and repaid on Nov. 1, 2012, with ordinary simple interest at 10% per year? 2. Jim loans Juanita $10,000 with interest compounded at a rate of 6% per year. How much money will Juanita owe Jim if she repays the entire loan at the end of five years? 3. Ashlea purchased 100 shares of Microsoft at a price of $25 per share. She hopes to double her investment. How long will she have to wait if the stock price increases at a rate of 10% per year? 4. In 1885, first-class postage for a one-ounce letter cost $0.02. The same postage in 2007 costs $0.41. What compounded annual increase in the cost of first-class postage has been experienced over this period of time? 5. Albert Einstein once noted that “compounding of interest is one of humanity’s great inventions.” To illustrate the mind-boggling effects of compounding, suppose $100 is invested at the end of each year for...
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- Spring '08
- Jim, Juanita, 343A Engineering Economics, first-class postage