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?
Question 2(5 points)
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?
Question 3(5 points)
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?
Question 4(5 points)
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?
Question 5(5 points)
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?
Question 6(5 points)
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
Question 7(5 points)
When a uniform series begins at a time other than the end of period 1, it is called a ________ series.
Question 8(5 points)
The present worth is always located __________ prior to the first uniform-series amount when using the P/A factor.
Question 9(5 points)
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.
Question 10(5 points)
An interest rate of 16% per year, compounded quarterly, is equivalent to what effective interest rate per year?
Question 11(5 points)
What effective interest rate per year is equivalent to an effective 18% per year, compounded semiannually?
Question 12(5 points)
Determine the P/G factor for 5 years at an effective interest rate of 6% per year, compounded semiannually.
Question 13(5 points)
A present sum of $5000 at an interest rate of 8% per year, compounded semiannually, is equivalent to how much money 8 years ago?
Question 14(5 points)
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?
Question 15(5 points)
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.