HW8SOL - ISEN 302 Economic Analysis of Engineering Projects...

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ISEN 302 Economic Analysis of Engineering Projects Spring 2010 Homework 8 - Solution 1. Problem 10.6 Salary in 2015 = 74 , 400(1 + 0 . 025) 9 = $92 , 915 2. Problem 10.10 (a) Cost in year 10 = 1000(1.10)(1.10)(1.10)(1.10)(1.10) = $1610.51 (b) Cost in year 10 at 5% per year = 1000(1 + 0 . 05) 10 = $1628 . 89 The cost is not the same because there are different compound rates on different amounts of money. 3. Problem 10.13 i f = 0.10 + 0.06 + (0.10)(0.06) = 16.6% PW = 130,000(P/F,16.6%,5) = 130 , 000[(1 / (1 + 0 . 166)] 5 = $60,319 The company should buy later. 4. Problem 10.15 Convert all cash flows into CV dollars and then use i. PW = 3000(P/F,8%,1) + [6000/(1 + 0.06)2](P/F,8%,2) + [8000/(1 + 0.06)3](P/F,8%,3) + 4000(P/F,8%,4) + 5000(P/F,8%,5) = 3000(0.9259) + 5340(0.8573) + 6717(0.7938) + 4000(0.7350) + 5000(0.6806) = $19,031 5. Problem 10.19 F = 150,000(F/P,10%,5) = 150,000(1.6105) = $241,575
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6. Problem 10.21 F = 0.005(15,200,000)(F/A,9%,7) = 76,000(9.2004) = $699,230 7. Problem 10.26
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HW8SOL - ISEN 302 Economic Analysis of Engineering Projects...

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