Engineering Economy
8th Edition
ISBN: 9780073523439
Author: Leland T Blank Professor Emeritus, Anthony Tarquin
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 38P
(a):
To determine
Compare the two different types of interest rate.
(b):
To determine
Calculate the amount difference between the compound interest rate and simple interest rate.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Bid 1: 9% per year, compounded quarterly
Bid 2: 3% per quarter, compounded quarterly
Bid 3: 8.8% per year, compounded monthly
(a) Determine the effective rate for each bid on the basis of semiannual periods.
(b) What are the effective annual rates? These are to be a part of the final bid selection.
(c) Which bid has the lowest effective annual rate?
In order to buy a car, you borrow $30,000 from a friend at 8% / year compounded monthly for 4 years. You plan to repay the loan with
48 equal monthly payments.
Problem 04.055 Continuous Compounding
Because of a chronic water shortage in California, new athletic fields must use artificial turf or xeriscape landscaping. If the
value of the water saved each month is $3,500, how much can a private developer afford to spend now on artificial turf
provided he must recover his investment in 5 years. Use an interest rate of 15% per year, compounded continuously?
The private developer can afford to spend $[
Chapter 1 Solutions
Engineering Economy
Ch. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8PCh. 1 - Prob. 9PCh. 1 - Prob. 10P
Ch. 1 - Prob. 11PCh. 1 - Prob. 12PCh. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - Prob. 16PCh. 1 - Determine the amount of money FrostBank might loan...Ch. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Prob. 22PCh. 1 - Prob. 23PCh. 1 - Prob. 24PCh. 1 - To attract new customers, EP Employees Credit...Ch. 1 - Prob. 26PCh. 1 - Prob. 27PCh. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - Prob. 30PCh. 1 - Prob. 31PCh. 1 - Prob. 32PCh. 1 - State University tuition and fees can be paid...Ch. 1 - Prob. 34PCh. 1 - Prob. 35PCh. 1 - Prob. 36PCh. 1 - Prob. 37PCh. 1 - Prob. 38PCh. 1 - Prob. 39PCh. 1 - Prob. 40PCh. 1 - Prob. 41PCh. 1 - Prob. 42PCh. 1 - Prob. 43PCh. 1 - What is the weighted average cost of capital for a...Ch. 1 - Prob. 45PCh. 1 - Prob. 46PCh. 1 - Prob. 47PCh. 1 - Prob. 48ESCh. 1 - Prob. 49ESCh. 1 - Prob. 50ESCh. 1 - Prob. 51ESCh. 1 - Prob. 52APQCh. 1 - Prob. 53APQCh. 1 - Prob. 54APQCh. 1 - Prob. 55APQCh. 1 - Prob. 56APQCh. 1 - Prob. 57APQCh. 1 - Prob. 58APQCh. 1 - Prob. 59APQCh. 1 - Prob. 60APQCh. 1 - Prob. 61APQCh. 1 - Prob. 1CSCh. 1 - Prob. 2CSCh. 1 - You developed an interest in the LCOE relation and...
Knowledge Booster
Similar questions
- An electric utility plant operates around the clock every day of the year. It uses fuel at a continuous rate of $50 million per year. (a) Based on an interest rate of 8% compounded continuously, calculate the following values for a 5-year period: (i) the uniform annual equivalent of the fuel cost;(ii) the present worth of the fuel consumed over a 5-year period; and (iii) the future worth equivalent of the fuel cost. (b) For parts (ii) and (iii), what are the values based on $50 million end-of-year cash flow and 8% compounded continuously? (c) For parts (ii) and (iii), what are the values based on $50 million end-of-year cash flow and 8% compounded annually ?arrow_forwardA bank is offering an interest rate of 3.50% per year, compounded every 3 months. What is the effective annual interest rate?arrow_forwardA credit union charges 4% interest per month on the unpaid balance for purchases made on the credit card. Calculate the effective annual interest rate. use a cash flow diagram and manual solution.arrow_forward
- Mr. Doe borrowed $1000 from his bank at 8% per year, compounded annually. He can (i) repay the$1000 together with the interest at the end of 3 years, or (ii) pay the interest at the end of each year andrepay the $1000 at the end of 3 years. By how much is (ii) better than (i)?arrow_forwardWhat is the answer and why? How much will Kingston Technologies have to pay each year in 9 equal payments, starting 2 years from now, to repay a $800,000 loan. The interest rate is 14% per year? How much Kingston Technologies will have to pay each year to repay the loan?arrow_forwardEach year Exxon-Mobil expends large amounts of funds for mechanical safety features throughout its worldwide operations. Carla Ramos, a lead engineer for Mexico and Central American operations, plans expenditures of $1 million now and each of the next 4 years just for the improvement of field-based pressure-release valves. Construct the cash flow diagram to find the equivalent value of these expenditures at the end of year 4, using a cost of capital esti- mate for safety-related funds of 12% per year. i = 12% F = ? -1 3 Year A = $1,000,000 Cash flow diagram.arrow_forward
- Valley Rendering, Inc. is considering purchasing a new flotation system for grease recovery. The com- pany can finance a $150,000 system at 5% per year compound interest or 5.5% per year simple interest. If the total amount owed is due in a single payment at the end of 3 years, (a) which interest rate should the company select, and (b) how much is the differ- ence in interest between the two schemes? in steps please the right answerarrow_forward1. A cash flow sequence starts in year 1 at $4000 and decreases by $300 each year through year 9. Determine (a) the value of the gradient G; (b) the amount of cash flow in year 5; and (c) the value of n for the (P%G, i% ,n) factor.arrow_forwardEngineering Economy What is the effective interest rate per 6 months for a nominal interest rate of12% per year compounded every 3 months?arrow_forward
- Problem 4-9 Tom started investing, as soon as he started his first job, at the rate of $400 per month as soon as get paid into a savings account that earns an interest of 1% per month. What equation or expression may be used to determine the account value 10 years from now?arrow_forwardTwo receipts of $1,000 each are desired at the EOYs 10 and 11. To make these receipts possible, four EOY annuity amounts will be deposited in a bank at EOYs 2, 3, 4, and 5. The bank’s interest rate (i) is 12% per year. (a) Draw a cash-flow diagram for this situation. (b) Determine the value of A that establishes equivalence in your cash-flow diagram. (c) Determine the lump-sum value at the end of year 11 of the completed cash-flow diagram based on your answers to Parts (a) and (b).arrow_forward(a) Calculate the amount deposited 1 year ago to have $1000 now at an interest rate of 5% per year. • (b) Calculate the amount of interest earned during this time period. please show me how you solved it mathematicallyarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education