1. You plan to invest some money in a bank account. Which of the following banks provides you with the highest effective rate of interest?
a. Bank 1; 6.0% with daily (365-day) compounding.
b. Bank 2; 6.1% with annual compounding.
c. Bank 3; 6.0% with monthly compounding.
d. Bank 4; 6.0% with annual compounding.
2. New microelectronics testing equipment was purchased 2 years ago by Mytesmall Industries at a cost of $600,000. At that time, it was expected to be used for 5 years and then traded or sold for its salvage value of $75,000. Expanded business in newly developed international markets is forcing the decision to trade now for a new unit at a cost of $800,000. The current equipment could be retained, if necessary, for another 2 years, at which time it would have a $5000 estimated market value. The current unit is appraised at $350,000 on the international market, and if it is used for another 2 years, it will have M&O costs (exclusive of operator costs) of $125,000 per year. Determine the values of P, n, S, and AOC for this defender if a replacement analysis were performed today. Make without using excel and detail.