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 yearend 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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