(1) Las Cruces Recreations Inc. headquartered in Las Cruces, NM operates a summer camp in Silver City, NM The cost data for a 12 - week summer camp are as follows:
Charge per camper = $220 per week
Variable cost per camper = $220 per Neck
Fixed costs = $240,000 per summer season
Capacity per week = 200 campers
Determine
a. The total number of campers to breakeven for the season
b. the profit if the camp is operated at 90% capacity
c. the additional profit that can be made if a discount of $100 per week is given for another 10 campers.
(2) A Sum of money invested at 10% interset, compounded quaterly, will quardruple in amount in approximately how many years?
(3) For the following cash flow, compute the interset rate at which the $240 cost is equivlent to the subsequent benefits.
| Year |
Cash Flow |
| 0 |
-240 |
| 1 |
75 |
| 2 |
95 |
| 3 |
100 |
| 4 |
90 |
(4) Dr. Dolittle decides to sell his current home and move to a larger home. He estimates that he can sell his current home for $100,000 and can buy a larger home for $175,000. He plans to use the entire $100,000 sale proceeds as a down payment on the new home and will finance the remainder for 10 years at 6% nominal annual interest compounded monthly. What is his estimated monthly mortgage payment?
(5) Mt Carloan is paying off a car loan by paying $400 at the end of each month. The nominal interest rate is 12% per year. How much interest is paid in each of the following
a. Last payment
b Fourth from the last payment
6) Christine brought a BMW when she came to LA as a County judge. The BMW was purchased by taking a loan that was to be paid off in 20 equal, quarterly payments. The interest rate on the loan was 12% per year with quartely compounding. After four years at the time that Christine made her 16th payment, she not married and sold the BMW to her friend Jane. Jane made arrangements with Christine's bank to refinance the loan and to pay Christine's unpaid balance by making 16 equal quaterly payments at the same interest rate that Christine was paying. After 3 1/4 years, at the time that Jane made her 13th payment, Jane flunked out and sold the car to Ally. Ally paid the bank $4,000 Cash to pay the loan balance. What was the amount of Chrisitne's loan to purchase the BMW when it was new?
(7) A local department store offers 24-month financing for a certain $1,000 appliance at an "Interest rate of 9% per year". The 24 equal end-of-month payments are computed as follows
Principal: $1,000
Interest at 9% per year = (0.09)(1000)(2) = $180
Credit investigation fee = $18 08
Total to be repaid = $1,198.08
Monthly payments = $1,198.08 / 24 = $49.92
What is the effective annual interest rate a customer would actually pay for this financing?
What is the nominal annual interest rate compounded monthly for this financing?
(8) You are considering buying a house and renting it to students. The yearly operating costs are $2050 The house can he sold for $335,000 at the end of 10 years and it is considered 18% to be a suitable annual effective interest rate. If the house costs $175,000 to purchase, how much would vou need to charge your tenants each year in rent?
(Assume a single payment for the years rent at the end of each year)
(9) For diagram below, compute the unknown value A. using the minimum number of compound interest factors. Note that if you do not use the minimum number of compound interest factors.
(10 ) Given the cash Ilow diagram below, determine the unknown value using an interest rate of 9%
