IOE+201+Homework+3

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

This preview shows page 1. Sign up to view the full content.

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)
This is the end of the preview. Sign up to access the rest of the document.

## 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.

Ask a homework question - tutors are online