Engineering Economic Analysis
1. The plan was to leave $4,400 on deposit in a savings account for 12 years at 10.0% interest compounded annually. It became necessary to withdraw $1,800 at the end of the 5th year. How much will be on deposit at the end of the 12-year period?
2. Using a 6% annual compound interest rate, what investment today is needed in order to withdraw $4,000 annually. Round your answers to the nearest dollar. The tolerance is +/- 2.
a. for 10 years? $_____
b. for 10 years if the first withdrawal does not occur for 3 years? $_____
3. Determine the present worth of 5 equal annual deposits of $1,100 at the end of years 1 through 5, followed by 4 equal annual withdrawals of $600 at the end of years 4 through 7. Note that both years 4 and 5 will have a deposit and a withdrawal. Interest is 5%. $_______ Round entry to the nearest dollar. Tolerance is ±4.
4. Your company seeks to take over Good Deal Company. Your company’s offer for Good Deal is $3,050,000 in cash upon signing the agreement followed by 10 annual payments of $350,000 starting one year later. The time value of money is 8.00%. What is the present worth of your company’s offer?