HW 1 solutions

# HW 1 solutions - IT 45000 Production Cost Analysis HW 1...

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IT 45000 – Production Cost Analysis Page 2 of 4 HW 1 1. What evaluation criterion is used in economic analysis? 2. What is meant by the term intangible factor ? 3. Interest is the manifestation of what general concept in engineering economy? 4. In order to restructure some of its debt, General Motors decided to pay off one of its short-term loans. If the company borrowed the money 1 year ago at an interest rate of 8% per year and the total cost of repaying the loan was \$82 million, what was the amount of the original loan? 5. How many years would it take for money to triple in value at 20% per year simple interest? 6. How many years would it take for an investment of \$280,000 to accumulate to at least \$425,000 at 15% per year interest? 7. Cisco International borrowed \$500,000 (loan A) at 10% per year simple interest and another \$500,000 (loan B) at 10% per year compound interest and paid only the interest at the end of each year for 3 years on both loans.

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## This note was uploaded on 10/02/2011 for the course IT 450 taught by Professor Staff during the Fall '08 term at Purdue.

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HW 1 solutions - IT 45000 Production Cost Analysis HW 1...

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