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Engineering Economy

Leland T. Blank, Anthony Tarquin

Chapter 2

Factors: How Time and Interest Affect Money - all with Video Answers

Educators

Chapter Questions

Problem 1

Find the correct numerical value for the following factors from the interest tables.
1. $(F / P, 8 \%, 25)$
2. $(P / A, 3 \%, 8)$
3. $(P / G, 9 \%, 20)$
4. $(F / A, 15 \%, 18)$
5. $(A / P, 30 \%, 15)$

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Problem 2

The U.S. Border Patrol is considering the purchase of a new helicopter for aerial surveillance of the New Mexico-Texas border with Mexico. A similar helicopter was purchased 4 years ago at a cost of $$\$ 140,000$$. At an interest rate of $7 \%$ per year, what would be the equivalent value today of that $$\$ 140,000$$ expenditure?

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06:08

Problem 3

Pressure Systems, Inc., manufactures high-accuracy liquid-level transducers. It is investigating whether it should update certain equipment now or wait to do it later. If the cost now is $$\$ 200,000$$, what will the equivalent amount be 3 years from now at an interest rate of $10 \%$ per year?

Narayan Hari
Narayan Hari
Numerade Educator

Problem 4

Petroleum Products, Inc., is a pipeline company that provides petroleum products to wholesalers in the northern United States and Canada. The company is considering purchasing insertion turbine flowmeters to allow for better monitoring of pipeline integrity. If these meters would prevent one major disruption (through early detection of product loss) valued at $$\$ 600,000$$ four years from now, how much could the company afford to spend now at an interest rate of $12 \%$ per year?

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Problem 5

Sensotech Inc., a maker of microelectromechanical systems, believes it can reduce product recalls by $10 \%$ if it purchases new software for detecting faulty parts. The cost of the new software is $$\$ 225,000$$. (a) How much would the company have to save each year for 4 years to recover its investment if it uses a minimum attractive rate of return of $15 \%$ per year? (b) What was the cost of recalls per year before the software was purchased if the company did exactly recover its investment in 4 years from the $10 \%$ reduction?

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Problem 6

Thompson Mechanical Products is planning to set aside $$\$ 150,000$$ now for possibly replacing its large synchronous refiner motors whenever it becomes necessary. If the replacement isn't needed for 7 years, how much will the company have in its investment set-aside account if it achieves a rate of return of $18 \%$ per year?

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Problem 7

French car maker Renault signed a $$\$ 75$$ million contract with ABB of Zurich, Switzerland, for automated underbody assembly lines, body assembly workshops, and line control systems. If ABB will be paid in 2 years (when the systems are ready), what is the present worth of the contract at $18 \%$ per year interest?

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Problem 8

Atlas Long-Haul Transportation is considering installing Valutemp temperature loggers in all of its refrigerated trucks for monitoring temperatures during transit. If the systems will reduce insurance claims by $$\$ 100,000$$ two years from now, how much should the company be willing to spend now if it uses an interest rate of $12 \%$ per year?

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Problem 9

GE Marine Systems is planning to supply a Japanese shipbuilder with aero-derivative gas turbines to power 11 DD-class destroyers for the Japanese Self-Defense Force. The buyer can pay the total contract price of $$\$ 1,700,000$$ now or an equivalent amount 1 year from now (when the turbines will be needed). At an interest rate of $18 \%$ per year, what is the equivalent future amount?

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00:54

Problem 10

What is the present worth of a future cost of $$\$ 162,000$$ to Corning, Inc., 6 years from now at an interest rate of $12 \%$ per year?

Subhadeepta Sahoo
Subhadeepta Sahoo
Numerade Educator
06:08

Problem 11

How much could Cryogenics Inc., a maker of superconducting magnetic energy storage systems, afford to spend now on new equipment in lieu of spending $$\$ 125,000$$ five years from now if the company's rate of return is $14 \%$ per year?

Narayan Hari
Narayan Hari
Numerade Educator

Problem 12

V-Tek Systems is a manufacturer of vertical compactors, and it is examining its cash flow requirements for the next 5 years. The company expects to replace office machines and computer equipment at various times over the 5-year planning period. Specifically, the company expects to spend $$\$ 9000$$ two years from now, $$\$ 8000$$ three years from now, and $$\$ 5000$$ five years from now. What is the present worth of the planned expenditures at an interest rate of $10 \%$ per year?

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00:51

Problem 13

A proximity sensor attached to the tip of an endoscope could reduce risks during eye surgery by alerting surgeons to the location of critical retinal tissue. If a certain eye surgeon expects that by using this technology, he will avoid lawsuits of $$\$ 1.25$$ and $$\$ 0.5$$ million 2 and 5 years from now, respectively, how much could he afford to spend now if his out-of-pocket costs for the lawsuits would be only $10 \%$ of the total amount of each suit? Use an interest rate of $8 \%$ per year.

Niamat Khuda
Niamat Khuda
Numerade Educator
00:00

Problem 14

The current cost of liability insurance for a certain consulting firm is $$\$ 65,000$$. If the insurance cost is expected to increase by $4 \%$ each year, what will be the cost 5 years from now?

Jennifer Stoner
Jennifer Stoner
Numerade Educator
06:08

Problem 15

American Gas Products manufactures a device called a Can-Emitor that empties the contents of old aerosol cans in 2 to 3 seconds. This eliminates having to dispose of the cans as hazardous wastes. If a certain paint company can save $$\$ 75,000$$ per year in waste disposal costs, how much could the company afford to spend now on the Can-Emitor if it wants to recover its investment in 3 years at an interest rate of $20 \%$ per year?

Narayan Hari
Narayan Hari
Numerade Educator

Problem 16

Atlantic Metals and Plastic uses austenitic nickel-chromium alloys to manufacture resistance heating wire. The company is considering a new annealing-drawing process to reduce costs. If the new process will cost $$\$ 1.8$$ million now, how much must be saved each year to recover the investment in 6 years at an interest rate of $12 \%$ per year?

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Problem 17

A green algae, Chlamydomonas reinhardtii, can produce hydrogen when temporarily deprived of sulfur for up to 2 days at a time. A small company needs to purchase equipment costing $$\$ 3.4$$ million to commercialize the process. If the company wants to earn a rate of return of $20 \%$ per year and recover its investments in 8 years, what must be the net value of the hydrogen produced each year?

Rashmi Sinha
Rashmi Sinha
Numerade Educator

Problem 18

How much money could RTT Environmental Services borrow to finance a site reclamation project if it expects revenues of $$\$ 280,000$$ per year over a 5-year cleanup period? Expenses associated with the project are expected to be $$\$ 90,000$$ per year. Assume the interest rate is $10 \%$ per year.

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Problem 19

Western Playland and Aquatics Park spends $$\$75,000$$ each year in consulting services for ride inspection. New actuator element technology enables engineers to simulate complex computer-controlled movements in any direction. How much could the amusement park afford to spend now on the new technology if the annual consulting services will no longer be needed? Assume the park uses an interest rate of $15 \%$ per year and it wants to recover its investment in 5 years.

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01:33

Problem 20

Under an agreement with the Internet Service Providers (ISPs) Association, SBC Communications reduced the price it charges ISPs to resell its high-speed digital subscriber line (DSL) service from $$\$ 458$$ to $$\$ 360$$ per year per customer line. A particular ISP, which has 20,000 customers, plans to pass $90 \%$ of the savings along to its customers. What is the total future worth of these savings over a 5-year horizon at an interest rate of $8 \%$ per year?

Charlene Bische
Charlene Bische
Numerade Educator
03:28

Problem 21

To improve crack detection in aircraft, the U.S. Air Force combined ultrasonic inspection procedures with laser heating to identify fatigue cracks. Early detection of cracks may reduce repair costs by as much as $$\$ 200,000$$ per year. What is the present worth of these savings over a 5 -year period at an interest rate of $10 \%$ per year?

Robin Corrigan
Robin Corrigan
Numerade Educator
03:16

Problem 22

A recent engineering graduate passed the FE exam and was given a raise (beginning in year 1) of $$\$ 2000$$. At an interest rate of $8 \%$ per year, what is the present value of the $$\$ 2000$$ per year over her expected 35-year career?

Kamalesh Bagrecha
Kamalesh Bagrecha
Numerade Educator

Problem 23

Southwestern Moving and Storage wants to have enough money to purchase a new tractor-trailer in 3 years. If the unit will cost $$\$ 250,000$$, how much should the company set aside each year if the account earns $9 \%$ per year?

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Problem 24

Vision Technologies, Inc., is a small company that uses ultra-wideband technology to develop devices that can detect objects (including people) inside buildings, behind walls, or below ground. The company expects to spend $$\$ 100,000$$ per year for labor and $$\$ 125,000$$ per year for supplies before a product can be marketed. At an interest rate of $15 \%$ per year, what is the total equivalent future amount of the company's expenses at the end of 3 years?

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Problem 25

Find the numerical value of the following factors by (a) interpolation and (b) using the appropriate formula.
1. $(P / F, 18 \%, 33)$
2. $(A / G, 12 \%, 54)$

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Problem 26

Find the numerical value of the following factors by (a) interpolation and (b) using the appropriate formula.
1. $(F / A, 19 \%, 20)$
2. $(P / A, 26 \%, 15)$

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Problem 27

A cash flow sequence starts in year 1 at $$\$ 3000$$ and decreases by $$\$ 200$$ each year through year 10. (a) Determine the value of the gradient $G$; (b) determine the amount of cash flow in year 8; and (c) determine the value of $n$ for the gradient.

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01:18

Problem 28

Cisco Systems expects sales to be described by the cash flow sequence $(6000+$ $5 k$ ), where $k$ is in years and cash flow is in millions. Determine (a) the value of the gradient $G$; (b) the amount of cash flow in year 6 ; and $(c)$ the value of $n$ for the gradient if the cash flow ends in year 12 .

Carson Merrill
Carson Merrill
Numerade Educator

Problem 29

For the cash flow sequence that starts in year 1 and is described by $900-100 k$, where $k$ represents years 1 through 5 , (a) determine the value of the gradient $G$ and (b) determine the cash flow in year 5.

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Problem 30

Omega Instruments has budgeted $$\$ 300,000$$ per year to pay for certain ceramic parts over the next 5 years. If the company expects the cost of the parts to increase uniformly according to an arithmetic gradient of $$\$ 10,000$$ per year, what is it expecting the cost to be in year 1 , if the interest rate is $10\%$ per year?

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Problem 31

Chevron-Texaco expects receipts from a group of stripper wells (wells that produce less than 10 barrels per day) to decline according to an arithmetic gradient of $$\$ 50,000$$ per year. This year's receipts are expected to be $$\$ 280,000$$ (i.e., end of year 1 ), and the company expects the useful life of the wells to be 5 years. (a) What is the amount of the cash flow in year 3, and (b) what is the equivalent uniform annual worth in years 1 through 5 of the income from the wells at an interest rate of $12 \%$ per year?

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02:48

Problem 32

Income from cardboard recycling at Fort Bliss has been increasing at a constant rate of $$\$ 1000$$ in each of the last 3 years. If this year's income (i.e., end of year 1) is expected to be $$\$ 4000$$ and the increased income trend continues through year 5, (a) what will the income be 3 years from now (i.e., end of year 3) and (b) what is the present worth of the income over that 5-year period at an interest rate of $10 \%$ per year?

Ashima Tiwari
Ashima Tiwari
Numerade Educator

Problem 33

Amazon is considering purchasing a sophisticated computer system to "cube" a book's dimensions-measure its height, length, and width so that the proper box size will be used for shipment. This will save packing material, cardboard, and labor. If the savings will be $$\$ 150,000$$ the first year, $$\$ 160,000$$ the second year, and amounts increasing by $$\$ 10,000$$ each year for 8 years, what is the present worth of the system at an interest rate of $15 \%$ per year?

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Problem 34

West Coast Marine and RV is considering replacing its wired pendant controllers on its heavy-duty cranes with new portable infrared keypad controllers. The company expects to achieve cost savings of $$\$ 14,000$$ the first year and amounts increasing by $$\$ 1500$$ each year thereafter for the next 4 years. At an interest rate of $12 \%$ per year, what is the equivalent annual worth of the savings?

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Problem 35

Ford Motor Company was able to reduce by $80 \%$ the cost required for installing data acquisition instrumentation on test vehicles by using MTS-developed spinning wheel force transducers. (a) If this year's cost (i.e., end of year 1) is expected to be $$\$ 2000$$, what was the cost the year before installation of the transducers? (b) If the costs are expected to increase by $$\$ 250$$ each year for the next 4 years (i.e., through year 5), what is the equivalent annual worth of the costs (years 1 through 5) at an interest rate of $18 \%$ per year?

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Problem 36

For the cash flow shown below, determine the value of $G$ that will make the future worth in year 4 equal to $$\$ 6000$$ at an interest rate of $15 \%$ per year.
$$
\begin{array}{c|ccccc}
\text { Year } & 0 & 1 & 2 & 3 & 4 \\
\hline \text { Cash Flow } & 0 & \$ 2000 & 2000-G & 2000-2 G & 2000-3 G
\end{array}
$$

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01:34

Problem 37

A major drug company anticipates that in future years it could be involved in litigation regarding perceived side effects of one of its antidepressant drugs. To prepare a "war chest," the company wants to have money available 6 years from now that has a present worth today of $$\$ 50$$ million. The company expects to set aside $$\$ 6$$ million the first year and uniformly increasing amounts in each of the next 5 years. If the company can earn $12 \%$ per year on the money it sets aside, by how much must it increase the amount set aside each year to achieve its goal?

Narayan Hari
Narayan Hari
Numerade Educator
01:40

Problem 38

A start-up direct marketer of car parts expects to spend $$\$ 1$$ million the first year for advertising, with amounts decreasing by $$\$ 100,000$$ each year. Income is expected to be $$\$ 4$$ million the first year, increasing by $$\$ 500,000$$ each year. Determine the equivalent annual worth in years 1 through 5 of the company's net cash flow at an interest rate of $16 \%$ per year.

Nick Johnson
Nick Johnson
Numerade Educator
02:25

Problem 39

Assume you were told to prepare a table of factor values (like those in the back of this book) for calculating the present worth of a geometric gradient series. Determine the first three values (i.e., for $n=1,2$, and 3 ) for an interest rate of $10 \%$ per year and a rate of change $g$ of $4 \%$ per year.

Christy Galilei
Christy Galilei
Numerade Educator
02:57

Problem 40

A chemical engineer planning for her retirement will deposit $10 \%$ of her salary each year into a high-technology stock fund. If her salary this year is $$\$ 60,000$$ (i.e., end of year 1) and she expects her salary to increase by $4 \%$ each year, what will be the present worth of the fund after 15 years if it earns $4 \%$ per year?

Nicholas Mogoi
Nicholas Mogoi
Numerade Educator

Problem 41

The effort required to maintain a scanning electron microscope is known to increase by a fixed percentage each year. A hightech equipment maintenance company has offered it services for a fee of $$\$ 25,000$$ for the first year (i.e., end of year 1) with increases of $6 \%$ per year thereafter. If a biotechnology company wants to pay for a 3-year contract up front to take advantage of a temporary tax loophole, how much should it be willing to pay if it uses an interest rate of $15 \%$ per year?

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Problem 42

Hughes Cable Systems plans to offer its employees a salary enhancement package that has revenue sharing as its main component. Specifically, the company will set aside $1 \%$ of total sales for year-end bonuses for all its employees. The sales are expected to be $$\$ 5$$ million the first year, $$\$ 6$$ million the second year, and amounts increasing by $20 \%$ each year for the next 5 years. At an interest rate of $10 \%$ per year, what is the equivalent annual worth in years 1 through 5 of the bonus package?

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00:53

Problem 43

Determine how much money would be in a savings account that started with a deposit of $$\$2000$$ in year 1 with each succeeding amount increasing by $10 \%$ per year. Use an interest rate of $15 \%$ per year and a 7 -year period.

Liuxi Sun
Liuxi Sun
Numerade Educator

Problem 44

The future worth in year 10 of a geometric gradient series of cash flows was found to be $$\$ 80,000$$. If the interest rate was $15 \%$ per year and the annual rate of increase was $9 \%$ per year, what was the cash flow amount in year 1?

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Problem 45

Thomasville Furniture Industries offers several types of high-performance fabrics that are capable of withstanding chemicals as harsh as chlorine. A certain midwestern manufacturing company that uses fabric in several products has a report showing that the present worth of fabric purchases over a certain 5 -year period was $$\$ 900,000$$. If the costs were known to geometrically increase by 5\% per year during that time and the company used an interest rate of $15 \%$ per year for investments, what was the cost of the fabric in year 2 ?

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Problem 46

Find the present worth of a series of investments that starts at $$\$ 1000$$ in year 1 and increases by $10 \%$ per year for 20 years. Assume the interest rate is $10 \%$ per year.

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00:48

Problem 47

A northern California consulting firm wants to start saving money for replacement of network servers. If the company invests $$\$ 3000$$ at the end of year 1 and increases the amount invested by $5 \%$ each year, how much will be in the account 4 years from now if it earns interest at a rate of $8 \%$ per year?

Lourence Gonhovi
Lourence Gonhovi
Numerade Educator

Problem 48

A company that manufactures purgable hydrogen sulfide monitors is planning to make deposits such that each one is $5 \%$ larger than the preceding one. How large must the first deposit be (at the end of year 1) if the deposits extend through year 10 and the fourth deposit is $$\$ 1250$$ ? Use an interest rate of $10 \%$ per year.

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04:56

Problem 49

What compound interest rate per year is equivalent to a $12 \%$ per year simple interest rate over a 15 -year period?

Aparna Shakti
Aparna Shakti
Numerade Educator

Problem 50

A publicly traded consulting engineering firm pays a bonus to each engineer at the end of the year based on the company's profit for that year. If the company's initial investment was $$\$ 1.2$$ million, what rate of return has it made on its investment if each engineer's bonus has been $$\$ 3000$$ per year for the past 10 years? Assume the company has six engineers and that the bonus money represents $5 \%$ of the company's profit.

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Problem 51

Danson Iron Works, Inc., manufactures angular contact ball bearings for pumps that operate in harsh environments. If the company invested $$\$ 2.4$$ million in a process that resulted in profits of $$\$ 760,000$$ per year for 5 years, what rate of return did the company make on its investment?

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01:51

Problem 52

An investment of $$\$ 600,000$$ increased to $$\$ 1,000,000$$ over a 5 -year period. What was the rate of return on the investment?

Priyanka Sadarangani
Priyanka Sadarangani
Numerade Educator
02:19

Problem 53

A small company that specializes in powder coating expanded its building and purchased a new oven that is large enough to handle automobile frames. The building and oven cost $$\$ 125,000$$, but new business from hot-rodders has increased annual income by $$\$ 520,000$$. If operating expenses for gas, materials, labor, etc., amount to $$\$ 470,000$$ per year, what rate of return will be made on the investment if only the cash flows that occur over the next 4 years are included in the calculation?

Wendi Zhao
Wendi Zhao
Numerade Educator

Problem 54

The business plan for a start-up company that manufactures multigas portable detectors showed equivalent annual cash flows of $$\$ 400,000$$ for the first 5 years. If the cash flow in year 1 was $$\$ 320,000$$ and the increase thereafter was $$\$ 50,000$$ per year, what interest rate was used in the calculation?

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02:33

Problem 55

A new company that makes mediumvoltage soft starters spent $$\$ 85,000$$ to build a new website. Net income was $$\$ 60,000$$ the first year, increasing by $$\$ 15,000$$ each year. What rate of return did the company make in its first 5 years?

David Mccaslin
David Mccaslin
Numerade Educator
01:25

Problem 56

A company that manufactures plastic control valves has a fund for equipment replacement that contains $$\$ 500,000$$. If the company spends $$\$ 75,000$$ per year on new equipment, how many years will it take to reduce the fund to less than $$\$ 75,000 \mathrm{at}$$ an interest rate of $10 \%$ per year?

Mariam Saleh-Esa
Mariam Saleh-Esa
Numerade Educator

Problem 57

An A&E firm is considering purchasing the building it currently occupies under a longterm lease because the owner of the building suddenly put it up for sale. The building is being offered at a price of $$\$ 170,000$$. Since the lease is already paid for this year, the next annual lease payment of $$\$ 30,000$$ isn't due until the end of this year. Because the A&E firm has been a good tenant, the owner has offered to sell to them for $$\$ 160,000$$. If the firm purchases the building with no down payment, how long will it be before the company recovers its investment at an interest rate of $12 \%$ per year?

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01:59

Problem 58

An engineer who invested very well plans to retire now because she has $$\$ 2,000,000$$ in her ORP account. How long will she be able to withdraw $$\$ 100,000$$ per year (beginning 1 year from now) if her account earns interest at a rate of $4 \%$ per year?

Anand Jangid
Anand Jangid
Numerade Educator
00:53

Problem 59

A company that manufactures ultrasonic wind sensors invested $$\$ 1.5$$ million 2 years ago to acquire part ownership in an innovative chip-making company. How long would it take (from the date of the initial investment) for its share of the chip company to be worth $$\$ 3$$ million if that company is growing at a rate of $20 \%$ per year?

Xiaomeng Zhang
Xiaomeng Zhang
Numerade Educator
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Problem 60

A certain mechanical engineer plans to retire when he has $$\$ 1.6$$ million in his brokerage account. If he started with $$\$ 100,000$$ in the account, how long will it be (from the time he started) before he can retire if the account makes a rate of return of $18 \%$ per year?

Danielle Fairburn
Danielle Fairburn
Numerade Educator
01:25

Problem 61

How many years will it take for a uniform annual deposit of size $A$ to accumulate to 10 times the size of a single deposit if the rate of return is $10 \%$ per year?

Gregory Higby
Gregory Higby
Numerade Educator

Problem 62

How many years would it take for an investment of $$\$ 10,000$$ in year 1 with increases of $10 \%$ per year to have a present worth of $$\$ 1,000,000$$ at an interest rate of $7 \%$ per year?

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02:14

Problem 63

You were told that a certain cash flow sequence started at $$\$ 3000$$ in year 1 and increased by $$\$ 2000$$ each year. How many years were required for the equivalent annual worth of the sequence to be $$\$ 12,000$$ at an interest rate of $10 \%$ per year?

Willis James
Willis James
Numerade Educator

Problem 64

A construction company has an option to purchase a certain bulldozer for $$\$ 61,000$$ at any time between now and 4 years from now. If the company plans to purchase the dozer 4 years from now, the equivalent present amount that the company is paying for the dozer at $6 \%$ per year interest is closest to
(a) $$\$ 41,230$$
(b) $$\$ 46,710$$
(c) $$\$ 48,320$$
(d) Over $$\$ 49,000$$

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01:20

Problem 65

The cost of tuition at a certain public university was $$\$ 160$$ per credit-hour 5 years ago. The cost today (exactly 5 years later) is $$\$ 235$$. The annual rate of increase is closest to
(a) $4 \%$
(b) $6\%$
(c) $8 \%$
(d) $10 \%$

Susan Cooper
Susan Cooper
Numerade Educator

Problem 66

The present worth of an increasing geometric gradient is $$\$ 23,632$$. The interest rate is $6 \%$ per year, and the rate of change is $4 \%$ per year. If the cash flow amount in year 1 is $$\$ 3000$$, the year in which the gradient ends is year
(a) 7
(b) 9
(c) 11
(d) 12

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04:42

Problem 67

The winner of a multistate megamillions lottery jackpot worth $$\$ 175$$ million was given the option of taking payments of $$\$ 7$$ million per year for 25 years, beginning 1 year now, or taking $$\$ 109.355$$ million now. At what interest rate are the two options equivalent to each other?
(a) $4 \%$
(b) $5 \%$
(c) $6 \%$
(d) $7 \%$

Charles Carter
Charles Carter
Numerade Educator
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Problem 68

A manufacturer of toilet flush valves wants to have $$\$ 2,800,000$$ available 10 years from now so that a new product line can be initiated. If the company plans to deposit money each year, starting 1 year from now, how much will it have to deposit each year at $6 \%$ per year interest in order to have the $$\$ 2,800,000$$ available immediately after the last deposit is made?
(a) Less than $$\$ 182,000$$
(b) $$\$ 182,500$$
(c) $$\$ 191,300$$
(d) Over $$\$ 210,000$$

Lauren Long
Lauren Long
Numerade Educator

Problem 69

Rubbermaid Plastics Corp. invested $$\$ 10,000,000$$ in manufacturing equipment for producing small wastebaskets. If the company uses an interest rate of $15 \%$ per year, how much money would it have to earn each year if it wanted to recover its investment in 7 years?
(a) $$\$ 2,403,600$$
(b) $$\$ 3,530,800$$
(c) $$\$ 3,941,800$$
(d) Over $$\$ 4,000,000$$

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Problem 70

An engineer deposits $$\$ 8000$$ in year 1, $$\$ 8500$$ in year 2, and amounts increasing by $$\$ 500$$ per year through year 10 . At an interest rate of $10 \%$ per year, the present worth in year 0 is closest to
(a) $$\$ 60,600$$
(b) $$\$ 98,300$$
(c) $$\$ 157,200$$
(d) $$\$ 173,400$$

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Problem 71

The amount of money that could be spent 7 years from now in lieu of spending $$\$ 50,000$$ now at an interest rate $18 \%$ per year is closest to
(a) $$\$ 15,700$$
(b) $$\$ 159,300$$
(c) $$\$ 199,300$$
(d) $$\$ 259,100$$

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Problem 72

A deposit of $$\$ 10,000$$ twenty years from now at an interest rate of $10 \%$ per year will have a present value closest to
(a) $$\$ 1720$$
(b) $$\$ 1680$$
(c) $$\$ 1590$$
(d) $$\$ 1490$$

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Problem 73

Income from sales of an injector-cleaning gasoline additive has been averaging $$\$ 100,000$$ per year. At an interest rate of $18 \%$ per year, the future worth of the income in years 1 through 5 is closest to
(a) $$\$ 496,100$$
(b) $$\$ 652,200$$
(c) $$\$ 715,420$$
(d) Over $$\$ 720,000$$

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01:41

Problem 74

Chemical costs associated with a packedbed flue gas incinerator (for odor control) have been decreasing uniformly for 5 years because of increases in efficiency. If the cost in year 1 was $$\$ 100,000$$ and it decreased by $$\$ 5000$$ per year through year 5, the present worth of the costs at $10 \%$ per year is closest to
(a) Less than $$\$ 350,000$$
(b) $$\$ 402,200$$
(c) $$\$ 515,400$$
(d) Over $$\$ 520,000$$

Hubert Agamasu
Hubert Agamasu
Numerade Educator

Problem 75

The future worth in year 10 of a present investment of $$\$ 20,000$$ at an interest rate of $12 \%$ per year is closest to
(a) $$\$ 62,120$$
(b) $$\$ 67,560$$
(c) $$\$ 71,900$$
(d) $$\$ 81,030$$

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Problem 76

A manufacturing company borrows $$\$ 100,000$$ with a promise to repay the loan with equal annual payments over a 5-year period. At an interest rate of $12 \%$ per year, the annual payment will be closest to
(a) $$\$ 23,620$$
(b) $$\$ 27,740$$
(c) $$\$ 29,700$$
(d) $$\$ 31,800$$

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Problem 77

Simpson Electronics wants to have $$\$ 100,000$$ available in 3 years to replace a production line. The amount of money that would have to be deposited each year at an interest rate of $12 \%$ per year would be closest to
(a) $$\$ 22,580$$
(b) $$\$ 23,380$$
(c) $$\$ 29,640$$
(d) Over $$\$ 30,000$$

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Problem 78

A civil engineer deposits $$\$ 10,000$$ per year into a retirement account that achieves a rate of return of $12 \%$ per year. The amount of money in the account at the end of 25 years is closest to
(a) $$\$ 670,500$$
(b) $$\$ 902,800$$
(c) $$\$ 1,180,900$$
(d) $$\$ 1,333,300$$

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Problem 79

The future worth (in year 8 ) of $$\$ 10,000$$ in year $$3, \$ 10,000$$ in year 5, and $$\$ 10,000$$ in year 8 at an interest rate of $12 \%$ per year is closest to
(a) $$\$ 32,100$$
(b) $$\$ 39,300$$
(c) $$\$ 41,670$$
(d) $$\$ 46,200$$

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Problem 80

Maintenance costs for a regenerative thermal oxidizer have been increasing uniformly for 5 years. If the cost in year 1 was $$\$ 8000$$ and it increased by $$\$ 900$$ per year through year 5, the present worth of the costs at an interest rate of $10 \%$ per year is closest to
(a) $$\$ 31,670$$
(b) $$\$ 33,520$$
(c) $$\$ 34,140$$
(d) Over $$\$ 36,000$$

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Problem 81

An investment of $$\$ 100,000$$ resulted in income of $$\$ 20,000$$ per year for 10 years. The rate of return on the investment was closest to
(a) $15 \%$
(b) $18 \%$
(c) $21 \%$
(d) $25 \%$

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Problem 82

A construction company invested $$\$ 60,000$$ in a new bulldozer. If the income from temporary leasing of the bulldozer is expected to be $$\$ 15,000$$ per year, the length of time required to recover the investment at an interest rate of $18 \%$ per year is closest to
(a) 5 years
(b) 8 years
(c) 11 years
(d) 13 years

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