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    Assignment FS

    Uploaded by

    Julio David
    1. A new engineer saves $685 initially and $375 per month for 48 months in an account earning 6% annual interest compounded monthly. 2. Dick Jones deposits $20 per month for 16 years in an account earning 6% annual interest compounded monthly and paid quarterly for his son's education. 3. A credit cardholder receives $150 in instant cash at a 4% fee and must repay in minimum $10 monthly payments including 1.5% interest on the unpaid balance.

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    Assignment FS

    Uploaded by

    Julio David
    109 views1 page
    1. A new engineer saves $685 initially and $375 per month for 48 months in an account earning 6% annual interest compounded monthly. 2. Dick Jones deposits $20 per month for 16 years in an account earning 6% annual interest compounded monthly and paid quarterly for his son's education. 3. A credit cardholder receives $150 in instant cash at a 4% fee and must repay in minimum $10 monthly payments including 1.5% interest on the unpaid balance.

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    1. A new engineer saves $685 initially and $375 per month for 48 months in an account earning 6% annual interest compounded monthly. 2. Dick Jones deposits $20 per month for 16 years in an account earning 6% annual interest compounded monthly and paid quarterly for his son's education. 3. A credit cardholder receives $150 in instant cash at a 4% fee and must repay in minimum $10 monthly payments including 1.5% interest on the unpaid balance.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    109 views1 page

    Assignment FS

    Uploaded by

    Julio David
    1. A new engineer saves $685 initially and $375 per month for 48 months in an account earning 6% annual interest compounded monthly. 2. Dick Jones deposits $20 per month for 16 years in an account earning 6% annual interest compounded monthly and paid quarterly for his son's education. 3. A credit cardholder receives $150 in instant cash at a 4% fee and must repay in minimum $10 monthly payments including 1.5% interest on the unpaid balance.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    ASSIGNMENT

    Feasibility Study – 2020

    1. A new engineer wants to save for down payment on a house. The initial deposit in $685, and $375
    is deposited at the end of each month. The savings account earns interest at an annual nominal rate
    of 6% with monthly compounding. How much is on deposit after 48 months?

    2. Upon the birth of his first child, Dick Jones decided to establish a saving account to partly pay for
    his son’s education. He plans to deposit $20 per month in the account, beginning when the boy is
    13 months old. The savings and loan association has a current interest policy of 6% per annum,
    compounded monthly, paid quarterly. Assuming no change in the interest rate, how much will be
    in the savings account when Dick’s son becomes 16 years old?

    3. A bank recently announced an “instant cash” plan for holders of its bank credit cards. A cardholders
    may receive cash from the bank up to a preset limit (about $500). There is a special charge of 4%
    made at the time the “instant cash” is sent to the cardholders. The debt may be repaid in monthly
    installments. Each month the bank charge 1.5 % on the unpaid balance. The monthly payment,
    including interest, may be as little as $10. Thus, for $150 of “instant cash”, an initial charge of $6
    is made and added to the balance due. Assume the cardholder makes a monthly payment of $10
    (this includes both principal and interest). How many months are required to repay the debts?

    4. A diesel manufacturer is considering the two alternative production machines, specific data are as
    follow:

    Alt.1 Alt. 2
    Initial cost $50,000 $75,000
    Estimated salvage value at end of useful life $10,000 $12,000
    Useful life of equipment in years 7 13
    The manufacturer uses an interest rate of 8% and wants to use PW method to compare these
    alternatives over an analysis period of 10 years.
    Alt. 1 Alt.2
    Estimated market value, end of 10 years analysis period $20,000 $15,000

    5. An investor paid $8000 to a consulting firm to analyze what be might do with a small parcel of
    land on the edge of town that can be bought for $30,000. In the report, the consultants suggested
    four alternatives:

    Alternatives Total investment Uniform Net Terminal Value


    Including Land* Annual Benefit at End of 20 yr
    ---------------------------------------------------------------------------------------------------------------------
    A Do nothing $ 0 $ 0 $ 0
    B Vegetable market 50,000 5,100 30,000
    C Gas station 95,000 10,500 30,000
    D Small motel 350,000 36,000 150,000
    ---------------------------------------------------------------------------------------------------------------------
    *Includes the land and structures but does not include the $8000 fee to the consulting firm
    Assuming 10% is the minimum attractive rate of return, what should the investor do?

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