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1.Constiuct a cash flow uiagiam foi the following cash flows: $2S,uuu outflow at
time u, $9,uuu pei yeai inflow in yeai 1 thiough S at an inteiest iate of 1u% pei
yeai, anu an unknown futuie amount in yeai S.

2.0niveisity tuition anu fees can be paiu by using one of two plans.
Eaily-biiu: Pay total amount uue 1 yeai in auvance anu get a 1u% uiscount.
0n-time: Pay total amount uue when classes stait.
The cost of tuition anu fees is $1u,uuu pei yeai.
(a) Bow much is paiu in the eaily-biiu plan.
(b) What is the equivalent amount of the savings compaieu to the-one-time
payment at the time that the on-time payment is maue.

S.A soliu waste uisposal company boiioweu money at 1u% pei yeai inteiest to
puichase new hauleis anu othei equipment neeueu at the company-owneu
lanufill site. If the company got the loan 2 yeais ago anu paiu it off with a single
payment of $4,6uu,uuu, what was the piinciple amount P of the loan.

4.If inteiest is compounueu at 2u% pei yeai, how long will it take foi $Su,uuu to
accumulate to $86,4uu.

S.CuK Rheosystems makes high-peifoimance iotational viscometeis capable of
steauy sheai anu yielu stiess testing in a iuggeu, compact footpiint. Bow much
coulu the company affoiu to spenu now on new equipment in lieu of spenuing
$2uu,uuu one yeai fiom now anu $Suu,uuu thiee yeais fiom now, if the company
uses an inteiest iate of 1S% pei yeai.

6. A company that makes self-clinching fasteneis expects to puichase new
piouuction-line equipment in S yeais. If the new units will cost $SSu,uuu, how
much shoulu the company set asiue each yeai, if the account eains 1u% pei
yeai.

7.Foi the factoi (FA, 1S%, S2), finu the peicent uiffeience between the
inteipolateu anu foimula-calculateu value, assuming the foimula-calculateu
value is the coiiect one.

8.Rolleu ball sciews aie suitable foi high-piecision applications such as watei jet
cutting. Theii total manufactuiing cost is expecteu to ueciease because of
incieaseu piouuctivity, as shown in the table. Beteimine the equivalent annual
cost at an inteiest iate of 8% pei yeai.

Yeai 1 2 S 4 S 6 7 8
Cost,
$1uuu
2uu 19S 19u 18S 18u 17S 17u 16S





9. Foi the cash flows below, ueteimine the amount in yeai 1, if the annual woith
in yeai 1 thiough 9 is $6u1.17 anu the inteiest iate is 1u% pei yeai.

Yeai Cost, $1uuu
1 A
2 A+Su
S A+6u
4 A+9u
S A+12u
6 A+1Su
7 A+18u
8 A+21u
9 A+24u

1u. The eneigy costs of a company involveu powuei coating of outuooi fuinituie
aie expecteu to inciease at a iate of $4uu pei yeai. The cost at the enu of the next
yeai (yeai 1) is expecteu to be $1S,uuu. Bow much yeais will it be fiom now
befoie the equivalent annual cost is $16,uuu pei yeai, if inteiest iate is 8% pei
yeai.


30('4
Bue uate: 2Siu Septembei 2u14 (Tuesuay)