IEE 300 Spring 2007 Exam #1
Questions 1 through 5 are worth 10 points each. They are short answer and partial credit may be given. Question 1 (10 points) Explain what minimum attractive rate of return is: The rate of return that must be equ
The rate of return of a cash ow series is determined by setting a PW-based or AWbased relation
equal to zero and solving for the value of 1. The ROR is a term used and understood by almost
everybody. Most people, however, can have consider
438 Chapter 16
Fundamentals of Depreciation
16.] How does depreciation effect a companys cash
162 What is the difference between book value and
16.3 State the difference bemecn hook depreciation
and tax depreciation.
Annual Worth Analysis
The annual worth method of comparing altematives is often preferred to the present worth method.
because the AW comparison is porlonned
Life-cycle cost analysis is appropriate for systems
operating and m
Factors: How Time and Interest Affect Money
Use of NPER function to find n values for various rate of return requirements,
Formulas and factors derived and applied in this chapter perform equivalence c
Combining Factors and Spreadsheet Functions
5 NPV(8%,B4:B18) + B3
Spreadsheet solution, Example 3.8. (a) Cash flows and NPV function and (b) Goal Seek to determine initial withdrawal amount in year 11.
Solution by Sprea
$1000 on Visa
Min payment is 2% of balance per month or $15 per month, whichever is higher
Interest rate on card is 18% per year compounded monthly
How long will it take to pay off the $1000?
1. The cash flow associated with a stripper oil well is expected to be $3,000 in month one, $2,950 in month two, and
amounts decreasing by $50 each month through year five.
a. What is the cash flow in the last month of year 5?
b. At an interest rate of 1%