ENG106W12_HW2-assignment _updated 1-22-12_

ENG106W12_HW2-assignment _updated 1-22-12_ - interest is 8...

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ENG 106 Homework #2 Winter 2012 Time Value of Money (continued): 2.32d What is the present worth of $9000 at the end of each year for 30 years at 8.75% interest compounded annually? 2.36 Five annual deposits in the amounts of $1,200, $1,000, $800, $600 and $400 are made into a fund that pays interest at a rate of 9% compounded annually. Determine the amount in the fund immediately after the fifth deposit. 2.38 What is the equal-payment series for 10 years that is equivalent to a payment series starting with $15,000 at the end of the first year, and decreasing by $3,000 each year over 10 years? Interest is 9% compounded annually. (answer: $3606.6) 2.40 The maintenance for the first year of your automobile is expected to be $100 and increases at a uniform rate of 10% per year. Determine the present worth of these costs during the first 5 years of maintenance. Prevailing
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Unformatted text preview: interest is 8% 2.45 In computing the equivalent present worth of each of the given cash flow series at period zero, which of the following expressions is incorrect. a) P = $100 (P/A, i, 4) (P/F, i, 4) b) P = $100 (F/A, i, 4) (P/F, i, 7) c) P = $100 (P/A, i, 7) - $100 (P/A, i, 3) d) P = $100 [(P/F, i, 4) + (P/F, i, 5) + (P/F, i, 6) + (P/F, i, 7)] 2.52 Consider the accompanying cash flow diagram. What value of C makes the inflow series equivalent to the outflow series at an interest rate of 12% compounded annually? (answer: $781.3) Nominal and Effective Interest, Compounding 3.2 A department store has offered you a credit card that charges interest at 0.95% per month, compounded monthly. What is the nominal interest (annual percentage) rate for this credit card? What is the effective annual interest rate? (answer: 12.01%) 0 1 2 3 4 5 6 7 8 2C C C C C C C C 1200 800...
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