1. Cummins Crane Corporation (3C) is considering replacing its controllers on its heavy lift cranes with new portable infrared controllers. 3C expects to achieve cost savings of $15K the second year, increasing by $1500 each year thereafter for the next 4 years.
a. Draw the Cash Flow Diagram
b. At an interest rate of 12% per year, what is the equivalent annual worth of the savings?
2. Given the nominal rate of 22%
a. What is the effective rate if compounded annually
b. For the following compounding periods, fill in the blanks. Show your work beside each row for credit (5 points each row)Compound Period# Compound Periods EAIR%
CSA
CQ
CM
CD
C Hourly
C Minutely
C Secondly
CC N/A