Multiple Questions Answers

1)The following investment is classified as?

a.  Simple – 1 Actual ROR
b.  Non-Simple – 1 Actual ROR
c.  Simple – up to 2 Actual RORs
d.  Non-Simple – up to 2 Actual RORs

2)A new product design is expected to require $10,000 in tooling which will be worth nothing in 5 years when the project ends.  Assuming an interest rate of 10% annually and annual expenses of $3,000 to produce 3000 units per year.  What is the average cost per unit?
$1.00
188
$2.39
$1.67

3) Using the rule of 72, how many years will it take to double your investment if the nominal interest rate is 12% compounded continuously?
a.  7.20 years
b.  5.65 years
c.   5.68 years
d.   6.00 years

4)  What is the Present Cost of  a 5 year service contract where you will pay $5000 initially, and this will decrease at a rate of $500/year starting in year one (i.e. your year 1 payment will be $4,500) and will end in year 5 (i.e. 6 total payments).  (i=10% annually compounded)?
a.-$17,204
b.-$19,954
c.-$18,628
d.-$19,523