Tutorial 1

# Tutorial 1 - and increasing by \$1000 over the previous year...

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Example 1 A homebuyer seeks a mortgage of \$100,000 and is offered two different packages: 1. A single mortgage of \$100,000 at 6%, compounded semi-annually 2. The homeowner offers the buyer a \$40,000 loan at 5%, compounded monthly; the remaining \$60,000 is to be borrowed from a bank at 8%, compounded annually

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Example 2 John plans to buy a taxicab for \$100,000 to run a taxi-service business, and expects to earn a gross income of \$120,000 per year. Maintenance cost is expected to be zero in each of the first two years, when it is under warranty, \$1000 in the 3th year
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Unformatted text preview: and increasing by \$1000 over the previous year in the following years. Gas cost is estimated to be \$1000 annually. If he sells the car after 5 years for \$30,000, is this a good investment? Example 3 • After earning your degree, you wish to establish a scholarship fund for the Faculty of Engineering students. If your salary allows you to put aside \$400 each month in a high-interest bank account with 12% interest (compounded monthly), and you intend for the scholarship to be paid out in 4 years, how much will the scholarship be worth?...
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## This note was uploaded on 04/01/2012 for the course MSCI 261 taught by Professor Bonkoo during the Winter '09 term at Waterloo.

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Tutorial 1 - and increasing by \$1000 over the previous year...

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