What will the balance the account the end the years

ISE 307, Term 153
ENGINEERING ECONOMIC ANALYSIS HW# 1 Solution
Due date: Wednesday, July 20

Q.1.	Which of the following alternatives would you choose, assuming an interest rate of 10% compounded annually?

Or

P1 =$100
P2=150 (P / F, 10%, 2) = 150 (0.8264) = $123.96 P3=200 (P / F, 10%, 6) = 200 (0.5645) = $112.9

Q.2.	How many years will it take to triple your investment of $5,000 if it has an interest rate of 10% compounded annually?

Q.3.

Q.4.	You deposit $5,000 today, $5,000 two years from now, and $5,000 fours years from now. How much money will you have at the end of year six if there are different annual compound-interest rates per period such that interest rate in the first two years is 5%, 7% in the third and fourth years and 8% in the fifth and sixth year?

Q.5.

Q.6.	Five annual deposits in the amounts of $20,000, $18,000, $16,000, $14,000, and $12,000 are made into a fund that pays interest at a rate of 10% compounded annually. Determine the amount in the fund immediately after the fifth deposit.

Q.7.

(a)Suppose that the price of oil is expected to be $120 per barrel for the next five years. What would be the present worth of the anticipated revenue trim at an interest rate of 10% compounded annually over the next five years?

Q.8.	From the following cash flow diagram, find the value of C that will establish economic equivalence between the deposit series and the withdrawal series at an interest rate of 8% compounded annually.

Q.9.

Another Solution:

P1 = 40000 (P/F, i, 5) = 40000 (1+i)-5
P2 = 4000 (P/A, i, 10) = 4000 [(1+i)10-1]/[i*(1+i)10] 40000 (1+i)-5 = 4000 [(1+i)10-1]/[i*(1+i)10]