Quiz Solution - Version A (Pink)

Quiz Solution - Version A (Pink) - UWlD Number Problem 1...

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Unformatted text preview: UWlD Number Problem 1. Multiple Choice questions. For each of the following questions, select the gn_e_ corred response by circling the letter. 1.1 [3 marks] Interest is at rate i per period, with i > 0. The number of periods is N, and N>1t (a) (F/A, l, N) < (FIA, 0, N) , / lg 4,. (b) (AIP, i, N) > (NP, 0, N). (c) (PIA, i, N) > (PIA, O, N) t (d) (A/F.i,N)=1lN-i . (e) The limit of (AIF, i, N) as N goes to infinity is i . 1.2 [3 marks] A deposit of $250,000 hasjust been made into an account that earns interest at 4% per year, compounded annually. Withdrawals of $5000 will be taken from the account each year, for 10 years, starting one year from now, Further withdrawals of X dollars will be made every 5 years, forever, starting 5 years from now Which of the following correctly calculates how large X can be? \/0L 4,. (a) (250,000 — 5000(P/A,4%,10)] x((1+.04)5-1} . (b) (250.000 — 5000(PIA,4%,10)) x004 x5 . (c) (250,000 + 5000(P/A,4%,10)) x((1+,04)5-1}t (d) (250,000 — 5000(P/A,4%,10)) +((1+.04)5-1} ‘ (e) (250,000 + 5000(PIA,4%,10)) +((1+lo4)5-1) . Problem 2. [10 marks] A new coffee maker for your office costs $100 now, and the costs of electricity. coffee grounds, milk and sugar will be $20 per month in the first month, then increasing by $0.10 per month each month compared to the previous month Calculate the present worth of these costs over 5 years, using a nominal interest rate of 12% per year, with monthly compounding. I MONK ' M “I t M l.: /i% ll :Mmfi/y efleu‘ivfi Infinjfruft 7": 66 I! P- I00 +£2.0-r o-Io(A/6 , l'/. ) éojjUZ‘, 12160) P; [00 + [£0 +0-lx £6633] X 44-755: “la”??? Zma/ILJ 2 mark: .4, mil/KS [oo UW ID Number Problem 3. [14 marks] Sam plans to deposit X dollars into an account earning 10% interest per year, each year for 6 years. starting one year from now. to save for his son's university education, and for his son‘s first car. Sam wants to save enough that he can withdraw $8000 each year for 4 years for his son's education, in years 7, 8, 9, and 10 from now, and also withdraw an extra $10.000 for a car 11 years from now, (a) Draw a rough cash flow diagram to represent the deposits and the withdrawals. x szan'fi / mark aAC/t WI'fkd/mwa/ 0V 0/9790-1/1" 0’1 call: fe/vw (mark Coy/(cf (JIII/QC'IT’O”) 0/ oufi flow (b) Calculate the value 01 X, the amount of each ol the 6 deposits. Use interest factor symbols in your answer. 2 mark) 2 mar/<5 X §000(Z’/07‘14)+10000(&F #07057 g M (I; nobé) 542301;.46 w 2mm“: W 2 Mark! Caner/1’ e7w°frn” UWID Number Problem 4. A proposal to produce and sell a new children‘s toy is under consideration. The first cost of equipment in the factory would be $5 million now. the salvage value of the equipment would be 3 0.35 million in 8 years, the annual operating costs would be 5 0.60 million in the first year, and the annual operating costs would increase by $ 0.05 million per year each year oompared to the previous year. It is expected that 0.5 million toys would be sold each year for 8 years. at a price that starts at $15 per toy in the first year, and decreases by 5% per year each year compared to the previous year. The MARR = 9% per year. Write an expression involving the above data, and interest factor symbols, that would give the overall present worth of the proposed investment. See page 1 for the list of allowed interest factor symbols. Do not evaluate the expression, as the arithmetic will just take a lot of time. 0:35 i 0.5xlS [fl/mark; I“)- [4-]. —‘= “I 3 1+; 1,0,05— 6ma’k: Zmarks E WP Q 8 PW: ——5- [6.6'+0‘05-(’%2 7526)](éi 9/.) ) é man/k; + oJxIYUD/A) "15%) 3/(I— 0.05) 4. 0.35 C P/,: 2 7X) Lmur/CS ...
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Quiz Solution - Version A (Pink) - UWlD Number Problem 1...

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