Scribd
Upload
23 views2 pages

Answers Econ

The document outlines various financial scenarios involving loans, contracts, and investments, detailing calculations for present worth, equivalent annual costs, and future values based on specified interest rates. Key figures include a loan amount of approximately $2,536,982 for a mall project, a present worth of $1,752,032 for consulting contracts, and a future account balance of $227,131.87 from annual investments. Additionally, it includes calculations for annual spending limits and revenue projections for a water desalting project.

Uploaded by

kevin wabwile
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
23 views2 pages

Answers Econ

The document outlines various financial scenarios involving loans, contracts, and investments, detailing calculations for present worth, equivalent annual costs, and future values based on specified interest rates. Key figures include a loan amount of approximately $2,536,982 for a mall project, a present worth of $1,752,032 for consulting contracts, and a future account balance of $227,131.87 from annual investments. Additionally, it includes calculations for annual spending limits and revenue projections for a water desalting project.

Uploaded by

kevin wabwile
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

(1) A commercial real estate developer plans to borrow money to finance an upscale mall in an exclusive

area of the city. The developer plans to get a loan that will be repaid with uniform payments of
$475,000 beginning in year 2 and ending in year 16. How much will a bank be willing to loan at an
interest rate of 14% per year?

The bank will be willing to loan the developer a sum of? 2536982.429

(2) Civil engineering consulting firms that provide services to outlying communities are vulnerable to a
number of factors that affect the financial condition of the communities, such as bond issues, real estate
developments, etc. A small consulting firm entered into a fixed-price contract with a spec home builder,
resulting in a stable income of $315,000 per year in years 1 through 5. At the end of that time, a mild
recession slowed the development, so the parties signed another contract for $160,000 per year for 4
more years. Determine the present worth of the two contracts at an interest rate of 10% per year.

The present worth of the two contracts is determined to be? $1,752,032.23

(3) What is the equivalent annual cost in years 1 through 10 of a contract that has a first cost of $78,000
in year 0 and annual costs of $19,000 in years 3 through 10? Use an interest rate of 10% per year.

The equivalent annual cost is determined to be? 26327.58292

(4) How much will Kingston Technologies have to pay each year in 11 equal payments, starting 2 years
from now, to repay a $800,000 loan. The interest rate is 15% per year?

Kingston Technologies will have to pay $ each year to repay the loan ?

(5) Lifetime savings accounts, known as LSAs, allow people to invest after-tax money without being
taxed on any of the gains. If an engineer invests $10,000 now and $10,000 each year for the next 11
years, how much will be in the account immediately after the last deposit, provided the account grows
by 11% per year?

After the last deposit, the balance in the account will be? $227,131.87

(6) How much money would be accumulated 19 years from now from deposits of $13,000 per year for 5
consecutive years, starting 5 years from now, if the interest rate is 10% per year.

The amount that would be accumulated is determined to be ? 205855.7

(7) A company that manufactures air-operated drain valve assemblies currently has $150,000 available
to pay for plastic components over a 5-year period. If the company spent only $52,000 in year 1, what
uniform annual amount can the company spend in each of the next 4 years to deplete the entire
budget? Let i = 8% per year.

The uniform annual amount the company can spend is ? 36906.33

(8) Attached

Answer – x=$123.9198

(9) The City of San Antonio is considering various options for providing water in its 50-year plan,
including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue
of $4.1 million per year for the first 4 years, after which less production will decrease revenue by 10%
per year each year. If the aquifer will be totally depleted in 21 years, what is the present worth of the
desalting option revenue at an interest rate of 7% per year?

The present worth of the desalting option revenue at an interest rate of 7% per year is determined to be
?

Answer = $25,037,593.83

You might also like