Manaf H.W - Eng Economics Manaf Alwaheeb U30512542 H.W(CH6...

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Eng. Economics Manaf Alwaheeb U30512542 H.W (CH6 – CH10) 03/30/2011 CH6: 6-1 C = $15 + $15 (A/G, 10%, 4) = $15 + $15 (1.381) = $35.72 6-5 A = $100 (A/P, 3.5%, 3) = $100 (0.3569) = $35.69 6-8 A = F[(e r −1)/(e m − 1)] = $5 × 10 6 [(e 0.15 − 1)/(e (0.15)(40) − 1)] = $5 × 10 6 [0.161834/402.42879] = $2,011 =================================================== CH7: 7-2 (a) F = $5, P = $1, n = 5 F = P (1 + i) n $5 = $1 (1 + i) 5 (1 + i) = 5 0.20 = 1.38 i * = 38% (b) For a 100% annual rate of return F = $1 (1 + 1.0) 5 = $32, not $5! Note that the prices diagonal charges do not necessarily reflect what anyone will pay a collector for his/her stamps. 7-4 The rate of return exceeds 60% so the interest tables are not useful. F = P (1 + i) n $25,000 = $5,000 (1 + i) 3 (1 + i) = ($25,000/$5,000) 1/3 = 1.71 i * = 0.71 Rate of Return = 71% 7-10 3,000 = 30 (P/A, i * , 120) (P/A, i * , 120) = 3,000/30 = 100 Performing Linear Interpolation: ( P/A, i%, 120) I 103.563 ¼% 90.074 ½% i * = 0.0025 + 0.0025 [(103.562 − 100)/(103.562 − 90.074)] = 0.00316 per month
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Nominal Annual Rate = 12 (0.00316) = 0.03792 = 3.79% ==================================================== CH8: 8-2 Compute Rates of Return Alternative X: $100 = $31.5 (P/A, i%, 4) (P/A, i%, 4) = $100/$31.5 = 3.17 ROR
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This note was uploaded on 09/11/2011 for the course ECON 201 - ECON 201 - taught by Professor Charlesc.chiemeke during the Spring '09 term at American University of Kuwait.

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Manaf H.W - Eng Economics Manaf Alwaheeb U30512542 H.W(CH6...

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