Economics Assignment
Question 1
One plan to raise money for Texas schools involves an "enrichment tax" that could collect $56 for every student in a certain school district. If there are 50,000 students in the district and the cash flow begins 2 years from now, what is the present worth of the enrichment plan over a 5-year planning period at an interest rate of 8% per year?
a) $8.124 million
b) $8.671 million
c) $8.587 million
d) $7.993 million
Question 2
How much money would you have to pay each year in 8 equal payments, starting 2 years from today, to repay a $20,000 loan received from a relative today, if the interest rate is 8% per year?
a) $3775.44
b) $3800.95
c) $3698.61
d) $3758.62
Question 3
An industrial engineer is planning for his early retirement 25 years from now. He believes he can comfortably set aside $10,000 each year starting now. If he plans to start withdrawing money 1 year after he makes his last deposit (i.e., year 26), what uniform amount could he withdraw each year for 30 years, if the account earns interest at a rate of 8% per year?
a) $69,666
b) $63,492
c) $65,110
d) $71,023
Question 4
Lifetime savings accounts, known as LSAs, would allow people to invest after-tax money without being taxed on any of the gains. If an engineer invests $10,000 now and $10,000 each year for the next 20 years, how much will be in the account immediately after the last deposit if the account grows by 15% per year?
a) F = $1,255,131
b) F = $1,188,101
c) F = $571,000
d) F = $1,528,377
Question 5
By spending $10,000 now and $25,000 three years from now, a plating company can increase its income in years 4 through 10. At an interest rate of 12% per year, how much extra income per year would be needed in years 4 through 10 to recover the investment?
a) A = $6000.95
b) A = $8556.42
c) A = $10,978.39
d) A = $18,655.42
Question 6
Compute the present worth (year 0) of the following cash flows at i = 12% per year.
|
Year
|
Amount, $
|
Year
|
Amount, $
|
|
0
|
5000
|
8
|
700
|
|
1-5
|
1000
|
9
|
600
|
|
6
|
900
|
10
|
500
|
|
7
|
800
|
11
|
400
|
a) P = $11,198
b) P = $11,150
c) P = $10,150
d) P = $10,198
Question 7
When a uniform series begins at a time other than the end of period 1, it is called a ________ series.
a) automatic
b) autonomous
c) shifted
d) uniform
Question 8
The present worth is always located __________ prior to the first uniform-series amount when using the P/A factor.
a) three periods
b) zero periods
c) two periods
d) one period
Question 9
For an interest rate of 10% per year compounded quarterly, determine the number of times interest would be compounded
(a) per quarter,
(b) per year, and
(c) per 3 years.
a) (a) 12
(b) 4
(c) 1
b) (a) 4
(b) 1
(c) 12
c) (a) 1
(b) 4
(c) 6
d) (a) 1
(b) 4
(c) 12
Question 10
An interest rate of 16% per year, compounded quarterly, is equivalent to what effective interest rate per year?
a) i = 16.59%
b) i = 16.99%
c) i = 16.89%
d) i = 16.79%
Question 11
What effective interest rate per year is equivalent to an effective 18% per year, compounded semiannually?
a) 18.0%
b) 18.1%
c) 18.7%
d) 18.3%
Question 12
Determine the P/G factor for 5 years at an effective interest rate of 6% per year, compounded semiannually.
a) 7.9345
b) 4.9455
c) 4.2124
d) 1.8836
Question 13
A present sum of $5000 at an interest rate of 8% per year, compounded semiannually, is equivalent to how much money 8 years ago?
a) $2669.50
b) $2644.50
c) $2691.25
d) $2680.15
Question 14
A 40-day strike at Boeing resulted in 50 fewer deliveries of commercial jetliners at the end of the first quarter of 2000. At a cost of $20 million per plane, what was the equivalent end-of-year cost of the strike (i.e., end of fourth quarter) at an interest rate of 18% per year, compounded monthly?
a) $2.505 billion
b) $1.209 billion
c) $1.1434 billion
d) $2.225 billion
Question 15
An engineer deposits $300 per month into a savings account that pays interest at a rate of 6% per year, compounded semiannually. How much will be in the account at the end of 15 years? Assume no interperiod compounding.
a) $77,575
b) $79,992
c) $85,636
d) $82,086