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FLORES, Mae Lyn R.

6, 2016
Engineering Economy
- Midterm

Assignment no. 2

1. A pulp and paper company is planning to set aside $150,000 now for possibly
replacing its large synchronous refiner motors. If the replacement isnt
needed for nine years, how much will the company have in the account if it
earns interest at a rate of 7% per year compounded semi-annually?

2. A loan association lends money at the rate of 15% compounded bi-monthly. A

man borrows P50,000 payable in 16 semiannual installment, the first
payment due at the end of two years reckoned from the date of the loan. How
much is each of the semiannual installments?

3. How much money would have to be deposited every quarter, beginning 3

months from now, if a company wanted to have $75,000 at the end of 3
years? Assume the interest rate is 11% per year, compounded continuously.

4. How many years will it take for a uniform annual deposit of size A to have the
same value as a single deposit now that is 10 times the size of one annual
deposit? The rate of return is 8% per year compounded weekly.

5. An individual is borrowing P100,000 at 8% interest compounded annually. The

loan is to be repaid in equal annual payment over 30 years. However, just
after the 8th payment is made, the lender allows the borrower to triple the
annual payment. Is the lender still charging 8% per year co. annually, what is
the balance still owed just after the 12th payment is made?

6. A loan of 10,000 is to be repaid over the period of 8 years. During the 4

years, exactly half the loan principal is to be repaid (along with accumulated
interest) by a uniform series of A1 dollars per year. The other half of the loan
principal is to be repaid over 4 years w/ accumulated interest by a uniform
series of A2 $/yr. if i=9%/yr what are A1 & A2?

7. Pedro Cruz is a student who used the XY loan program to borrow $4,000 four
years ago when the interest was 2% per year. 5,000 was borrowed three
years ago at 4%. Two years ago he borrowed 3,000 at 3%, and last year
7,000 was borrowed at 6% per year. Now he would like to consolidate his debt
into a single 20-year loan with 5% fixed annual interest rate. If Pedro makes
annual payments (starting in one year) to repay his total debt, what is the
amount of each payment?

8. Consider a principal amount of $1,000 to be invested for three years at a

nominal rate of 12% compounded semi annually. What would be the effective
annual interest rate for one year?

9. Janine has a bank loan for $10,000 to pay for his new truck. This loan is to be
repaid in equal end month installments for five years with a nominal interest
rate of 12% compounded monthly. What is the amount of each payment?

10.Suppose that a $100 lump sum amount is invested for 10 years at a nominal
interest rate of 6% compounded quarterly. How much is it worth at the end of
tenth year?