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Unformatted text preview: MSE 304 Engineering Economy Quiz 2 Show equations used and all calculations. 1. A gold mine is projected to produce $20,000 during its first year of operation, $19,000 during its second year, $18,000 the third year, and so on. If the mine is expected to produce for a total of 10 years, and the effective annual interest rate is 6%, what is its present worth? Show the cash flow diagram. 2. $5000 is placed in a new bank account that has a nominal interest rate of 5% per year. No other contributions are made to the account. With monthly compounding, how much interest will have been earned after five years? MSE 304 Engineering Economy Quiz 2 3. An individual contributes $200 per month to a 401(k) retirement account. The account earns interest at a nominal annual interest rate of 8% with interest compounded monthly. What is the value of the account after 35 years? 4. A student wants to save enough money from his job to pay for one year's tuition ($5000). How much money must the student save each month if the savings account pays 6% interest, compounded quarterly? The student needs the money in 12 months. ...
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This test prep was uploaded on 04/07/2008 for the course MSE 304 taught by Professor Reiner during the Spring '08 term at CSU Northridge.
- Spring '08