ORIE 4150/5150 Homework #3 Due February 17, 2012 1. Tower Corporation has a project that will generate cash flows of $200,000 per year for 8 years, then end. Using the year-end convention and an annual interest rate of 12%, find the NPV of the project. 2. Bice Enterprises purchases a machine, and gets a loan from the bank to pay for it. The machine cost $60,000 today. Bice will make 60 month end payments at a monthly interest rate of 0.50%. Find the monthly payment. 3. Filbert Consolidated arranges to sell equipment to Hax Industries on the installment plan, collecting a constant payment of $800 per month for 48 months, at month end. If the annual interest rate is 8%, find the equivalent cash price. 4. Maple Inc. deposits $300 per month in an interest bearing account. The annual interest rate is 3.20%. Find the amount in the account after 68 months have passed. The deposits are made at the end of each month, and interest is compounded monthly. 5.
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