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Exam 20: Engineering Economics

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Question 21

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You have loaned your roommate $2,000.Your roommate has agreed to repay the loan in two years.What is the monthly payment if he agrees to pay an interest rate of 6% compounded monthly?

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Question 22

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Visual aids that show the flow of costs and revenues over a period of time are known as

A) cash flow diagrams.
B) cost - revenue diagrams.
C) Venn diagrams.
D) business plans.

E) All of the above
F) B) and C)

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Question 23

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If you deposit $100 into an account that pays 5% compounded quarterly, how many years will it take to reach a value of $444?

The interest that would be paid only on the initial borrowed or deposited amount is

A bank charges interest at a rate of 21% per year, compounded monthly.If a senior in college borrows $4500 from the bank to pay her last tuition bill and intends to pay it 3 years later (after she gets a high-paying engineering job), how much will she have to pay?

What is the effective interest rate corresponding to the nominal rate of 5% compounded monthly?

If you deposit $1000 into an account that pays 3% compounded daily, what would be the value in the account after 10 years?

If you deposit $100 into an account that pays an interest rate that compounds quarterly, what is the interest rate if the value in the account after 30 years is $444?

What nominal rate, compounded monthly, would yield an effective rate of 10%?

In early 2013, $2000 was invested at a certain interest rate compounded annually.One year later, $1200 was deposited in another account at the same interest rate, also compounded annually.At the end of that year, there was a total of $3573.80 in both accounts.What is the annual interest rate?

The stated or the quoted interest rate is called the nominal interest rate, and the actual earned interest rate is called the effective interest rate.

How many years will it take an investment to double at an annual interest rate of 4% compounded quarterly? Express your answer in years to 2 decimal places.

If you deposit $5,000 into a CD (certificate of deposit) that pays 3% simple interest for 5 years, what is its value at maturity?

Your parents give you $12,000 as a college graduation gift.They tell you that it's from a $3,000 investment they made when they first got married that paid 10% simple interest.How long ago was their investment made?

Imagine, your car loan payment extends for 5 years at 8% interest compounded monthly.After how many months do you pay off half of your loan?

If you deposit $1000 into an account that pays 3% compounded quarterly, what would be the value in the account after 10 years?

You have taken out a mortgage for a new home in the amount of $200,000.You have agreed to repay the mortgage in 30 years.What is your monthly payment if you agree to pay an interest rate of 6.0% compounded monthly?

If you deposit $1000 into an account that pays 3% compounded semiannually, what would be the value in the account after 10 years?

You walk into a bank with $1,000 that you wish to invest in a CD (certificate of deposit).The bank gives you two options: Option #1: 3.97% compounded monthly Option #2: 4.00% compounded annually Which option is better for you? Compare the two options by comparing their effective interest rates.

Your parents give you $12,000 as a college graduation gift.They tell you that it is from an investment they made 30 years ago that paid 10% simple interest.What was their original investment?