Schaum's Outline of Engineering Economics 1st. Edition by Jose Sepulveda, William Souder, Byron S. Gottfried | 9780070238343 | 0070238340 | Holooly

Engineering Economy

Schaum's Outline of Engineering Economics

233 SOLVED PROBLEMS

Question: 5.1

A savings bank is selling long-term savings certificates that pay interest at the rate of 7 1/2% per year, compounded continuously. The bank claims that the actual annual yield of these certificates is 7.79%. What does this mean? ...

Verified Answer:

The nominal interest rate is 7

\frac{1}{2}[/...

Question: 5.2

A savings bank offers long-term savings certificates at 7 1/2% per year, compounded continuously. If a 10-year certificate costs $1000, what will be its value at maturity? Compare with the value that would be obtained if the interest were compounded annually rather than continuously. ...

Verified Answer:

From (5.2),

F/P = e^m

(5.2...

Question: 8.P.5

Find the ROR for cash flows of -$50 000 in year 0 and +$I6 719 each year in years 1-5. ...

Verified Answer:

From (8.2), NPV = -|CF

_0

| + A(PIA, ...

Question: 10.4

Compute the CUV for keeping the old pump of Example 10.3 another four years, as against buying the new pump and keeping it seven years. ...

Verified Answer:

Substituting the numerical values from Example 10....

Question: 5.3

A savings account earns interest at the rate of 6% per year, compounded continuously. How much money must initially be placed in the account to provide for twenty end-of-year withdrawals, if the first withdrawal is $1000 and each subsequent withdrawal increases by $200? ...

Verified Answer:

The solution may be formulated after (2.11): P = A...

Question: 9.P.4

Solve Problem 9.3 by an ROR calculation. ...

Verified Answer:

\begin{matrix} proposal\ A & (A/P,\ i^*...

Question: 5.6

At what rate must funds be continuously added to a savings account in order to accumulate $10 000 in 15 years, if interest is paid at 5% per year, compounded continuously? ...

Verified Answer:

By (5.10),

\bar{A}/F = \frac{r}{e^m - 1...

Question: 9.6

Consider two competing projects, for which MARR = 16%: ...

Verified Answer:

Here, C is the initial investment, A is the annual...

Question: 9.1

The ABC Company is currently earning an average before-tax return of 25% on its total investment. The board of directors of ABC is considering three proposals as given in Table 9-1. ...

Verified Answer:

Compute net present values, using the attainable M...

Question: 5.P.1

What effective annual interest rate corresponds to a nominal interest rate of 10% per year, compounded continuously? ...

Verified Answer:

i = e^{0.10} - 1 = 0.105171 ≈ 10.52...

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