IOE+201+Homework+3 - Homework #3 IOE 201 - Economic...

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Homework #3 IOE 201 - Economic Decision Making Homework #3: Answers are due Wednesday, September 30, 2009 1. Textbook, p. 118, Problem 3.46 You are buying a home for $260,000. If you make a down payment of $50,000 and take out a mortgage on the rest at 8.5% [per year] compounded monthly, what will be your monthly payment if the mortgage is to be paid off in 15 years. [Payments made at end of each month.] 2. A manufacturing company purchases a new robot for its assembly plant, and plans to use the robot for 10 years. Maintenance costs are expected to be zero at the end of the first year, $200 at the end of the second year, and to continue to increase by $200 at the end of each subsequent year (i.e., to be $400 in the third year, $600 in the fourth year, etc.). If the company has an account with an interest rate of 7% per year, compounded annually: (a) How much should the company plan to set aside now in the account, in order to pay for maintenance costs over the life of the robot? (b)
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This note was uploaded on 03/18/2010 for the course IOE 201 taught by Professor Dennisblumenfield during the Fall '09 term at University of Michigan-Dearborn.

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