Homework 5 (4.2)

# Homework 5 (4.2) - FINANCIAL MATHEMATICS SILABO GERENCIA...

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SILABO – GERENCIA EMPRESARIAL Universidad Iberoamericana UNIBE Due Date : March 31, 2011 Deliver hard copy at the beginning of class and send the electronic file through email. Note: In all the problems set the student must provide a clear mathematical argument for the response. Otherwise a partial credit will be given for correct answers. Book: Mathematics of Money (15 Exercises) Exercises 14.1 Exercises: 2, 6, 8, 10, 12, 15, 16 Exercises 14.2 Exercises: 4, 6, 8, 10, 12, 15, 16, 17 Page 1 of 5 FINANCIAL MATHEMATICS HOMEWORK 5

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Exercises 4.2 4) Cattaruaqua Ginseng Enterprise is considering switching to new packaging equipment that would allow the company to package its products more quickly and with less expensive packaging materials. The new equipment would cost \$72,500.00, but the company estimates that it would save \$14,575.00 worth of labor and materials costs annually. What is the payback period for this investment? 72,500/14,575 = 4.97 years The payback period will be 5 years. 6) Frank’s credit card has no annual fee, but charges a 23.99% interest rate. His card issuer offers him the opportunity to switch to a new card with a lower 16.99% rate, but that card has a \$35 annual fee. How much of an average balance would Frank have to carry in order for it to be
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