Name Reg

: Januar H. Bornet : 5415116451

~Engineering Economy, 1st Task~

1.08>> At what interest rate are $450 a year ago and $550 one year from now equivalent? 1.43>> If you invest $10.000 now in real estate venture, how much must you sell your property for 10 years from now if you want to make a 12% per year rate of return on your investment? Define the economy symbols and draw the cash flow diagram! 2.32>> What single payment 12 years from now would be equivalent to a payment of $6200 five years from now at an interest rate of 13% per year 2.67>> If a person deposits $5000 now at 8% per year interest and plans to withdraw $500 per year every year starting 1 year from now, how long can full withdrawal be made?

==ANSWERS======================================================================= 1.08>> use the statement $450 a year ago as present point, it means n which will we use is 2. F= $550 P= $450 N= 2 years I= ?

F = P (1+i)n

I = 1.10 1 I = 0.1 = 10%

550 = 450 (1+i)2 (1+i)2 = (1+i) = ( )

The interest rate which is used is 10% per year

(1+i) = 1.10

1.43>> use statement now as present point. Cash flow diagram:

P = $10.000 I = 12% N = 10 years

Calculation: F= ( = = F= ( ( ) ) ), by using the Interest rate table for 12% and n=10, P/F value is

It means that we should sell the property for $31.058 in the next 10 years to get 12% interest rate per year on our property investment

2.32>> Cash flow diagram:

F1 = $6200
I = 13% N = 5 for F1 and 12 for F2 F2 = ? P=?

First of all, we have to determine the value of P for F1, and then we can get the value for F2 using P (1) P = = ( ( ) ) , because there are no table for I = 13%, we have to determine the

value of (P/F) manually P = =

= P =

Now we have the value of P, and we can determine the value of F2 (2) F2 = ( = ) (
value of (F/P) manually

), because there are no table for I = 13%, we have to determine the

F2 = = = F2 =

( ( (

) ) )

2.67>> cant define the answer