Economics 15

Question 1 (5 points)
One plan to raise money for Texas schools involves an enrichment tax that could collect $56 for every student in a certain school district. If there are 50000 students in the district and the cash flow begins 2 years from now what is the present worth of the enrichment plan over a 5-year planning period at an interest rate of 8% per year?
$8.124 million
$8.671 million
$8.587 million
$7.993 million
Question 2 (5 points)
How much money would you have to pay each year in 8 equal payments starting 2 years from today to repay a $20000 loan received from a relative today if the interest rate is 8% per year?
$3775.44
$3800.95
$3698.61
$3758.62
Question 3 (5 points)
An industrial engineer is planning for his early retirement 25 years from now. He believes he can comfortably set aside $10000 each year starting now. If he plans to start withdrawing money 1 year after he makes his last deposit (i.e. year 26) what uniform amount could he withdraw each year for 30 years if the account earns interest at a rate of 8% per year?
$69666
$63492
$65110
$71023
Question 4 (5 points)
Lifetime savings accounts known as LSAs would allow people to invest after-tax money without being taxed on any of the gains. If an engineer invests $10000 now and $10000 each year for the next 20 years how much will be in the account immediately after the last deposit if the account grows by 15% per year?
F = $1255131
F = $1188101
F = $571000
F = $1528377
Question 5 (5 points)
By spending $10000 now and $25000 three years from now a plating company can increase its income in years 4 through 10. At an interest rate of 12% per year how much extra income per year would be needed in years 4 through 10 to recover the investment?
A = $6000.95
A = $8556.42
A = $10978.39
A = $18655.42
Question 6 (5 points)
Compute the present worth (year 0) of the following cash flows at i = 12% per year.
Year
Amount $
Year
Amount $
0
5000
8
700
15
1000
9
600
6
900
10
500
7
800
11
400
P = $11198
P = $11150
P = $10150
P = $10198
Question 7 (5 points)
When a uniform series begins at a time other than the end of period 1 it is called a________ series.
automatic
autonomous
shifted
uniform
Question 8 (5 points)
The present worth is always located __________ prior to the first uniform-series amount when using the P/A factor.
three periods
zero periods
two periods
one period
Question 9 (5 points)
For an interest rate of 10% per year compounded quarterly determine the number of times interest would be compounded
(a) per quarter
(b) per year and
(c) per 3 years.
(a) 12
(b) 4
(c) 1
(a) 4
(b) 1
(c) 12
(a) 1
(b) 4
(c) 6
(a) 1
(b) 4
(c) 12
Question 10 (5 points)
An interest rate of 16% per year compounded quarterly is equivalent to what effective interest rate per year?
i = 16.59%
i = 16.99%
i = 16.89%
i = 16.79%
Question 11 (5 points)
What effective interest rate per year is equivalent to an effective 18% per year compounded semiannually?
18.0%
18.1%
18.7%
18.3%
Question 12 (5 points)
Determine the P/G factor for 5 years at an effective interest rate of 6% per year compounded semiannually.
7.9345
4.9455
4.2124
1.8836
Question 13 (5 points)
A present sum of $5000 at an interest rate of 8% per year compounded semiannually is equivalent to how much money 8 years ago?
$$2669.50
$2644.50
$2691.25
$2680.15
Question 14 (5 points)
A 40-day strike at Boeing resulted in 50 fewer deliveries of commercial jetliners at the end of the first quarter of 2000. At a cost of $20 million per plane what was the equivalent end-of-year cost of the strike (i.e. end of fourth quarter) at an interest rate of 18% per year compounded monthly?
$2.505 billion
$1.209 billion
$1.1434 billion
$2.225 billion
Question 15 (5 points)
An engineer deposits $300 per month into a savings account that pays interest at a rate of 6% per year compounded semiannually. How much will be in the account at the end of 15 years? Assume no interperiod compounding.
$77575
$79992
$85636
$82086