9-11-2014 ENGINEERING ECONOMIC ANALYSIS EGR3713   Assignment 2, Due on Thursday 9-18-14 DRAW ALL CASH FLOW DIAGRAMS   An individual is borrowing $175,000 for a 20...

9-11-2014

ENGINEERING ECONOMIC ANALYSIS EGR3713  

Assignment 2,

Due on Thursday 9-18-14

DRAW ALL CASH FLOW DIAGRAMS

1. An individual is borrowing $175,000 for a 20 year loan at 3.95% per year compounded monthly. Compute the monthly payment. 
2. Continue on Q 1: Immediately after the 104^th  monthly payment, the home owner plans to sell the house.  How much money is owed back to the bank? 
3. Alternative to Q 2.  Immediately after the 104^th payement, the home owner wins a $25,000 lottery ticket, decides to keep the house and continue making payements of the same monthly amount.  How long will it take to pay off the mortgage?
4. One more question on the mortage of Q 1: Compute tha spilt between principal and interest paid with the 80^thmonthly payment of this loan.
   1. An international bank is charging a nominal intrest rate of 0.75% per year compounded continuously. What is the effective annual interest rate?
   2. A CE graduate begins working when she turns 28 at an annual salary of $67,000.  She is promised raises of 2.5% per year every year.  She palns to set aside 10% of her salary into a retirement plan (i.e., her first retirement set aside amount is $67,000x0.1=$6,700, the 2^nd is $67,000x1.025x0.1=$6,867.5 and so on).  She plans to work till her 60^th birthday.  How much she would have accumulated at retirement assuming that her retirement account makes an average annual ineterst of 4.3% per year  (ignore inflation).
   3. Continue on Q 6:  What is the annual pension she can afford drawing from this retirement account, starting on her 61^st birthday, assuming she will live to turn 85?