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Quiz1_solution

Quiz1_solution - 2 of 2 2 Curry invested his money in one...

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ISEN 302-502 Economic Analysis of Engineering Projects 9/14/2009 1 of 2 ISEN 302-502 : Quiz #1 Solution 1. Hart started his engineering project in 2006. In 2006, he borrowed \$800 from Citibank. And in 2008 and 2009, he borrowed \$700 and \$500, respectively. According to the contract with Citibank, he should pay pack his all borrowed money in 2012. Suppose that interest rate is 5.5% per year. a. (3) Draw cash flow diagram. (Exactly draw inflows and outflows) b. (5) In 2011 , what is the equivalent amount for his all borrows money? If the answer is not integer, round it up. You can use these formulas. n i F P ) 1 ( 1 , n i P F ) 1 ( 2424 ... 049468 . 2424 ) 055 . 0 1 ( 500 ) 055 . 0 1 ( 700 ) 055 . 0 1 ( 800 ) 1 ( ) 1 ( ) 1 ( 2 3 5 2 2009 3 2008 5 2006 2011 i P i P i P F c. (2) Using the answer in (b), calculate the equivalent value in 2012 ? 2557 32 . 2577 ) 055 . 0 1 ( 2424 ) 055 . 0 1 ( 1 2011 2012 F F

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ISEN 302-502 Economic Analysis of Engineering Projects
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Unformatted text preview: 9/14/2009 2 of 2 2. Curry invested his money in one engineering project. After 5 years, if he takes \$5000 from that project, what is the annual worth or equivalent uniform annual worth? Suppose that interest rate is 7% per year. a. (3) Solve it using standard notation. But you know that (A/P, 7%,5) =0.24 and (P/F,7%,5)=0.17 204 24 . * 17 . * 5000 ) 5 %, 7 , / )( 5 %, 7 , / ( ) 5 %, 7 , / ( ) 5 %, 7 , / ( 5000 \$ P A F P F P A P A F A F A F b. (2) What is the value of (F/A, 7%, 5)? From (a), we know that 0408 . 24 . * 17 . ) 5 %, 7 , / )( 5 %, 7 , / ( ) 5 %, 7 , / ( P A F P F A Since ) 5 %, 7 , / ( 1 ) 5 %, 7 , / ( F A A F , 51 . 24 5098 . 24 0408 . 1 3. (5) Write the Aggie Honor Code. “ An Aggie does not lie, cheat, or steal or tolerate those who do ”...
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Quiz1_solution - 2 of 2 2 Curry invested his money in one...

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