IND E 250 FUNDAMENTALS OF ENGINEERING ECONOMY

Labs 3, Wednesday 04/15 in class (10+1 bonus pts):

1. (3 pts) If you invest $2000 today at a 5% interest compounded daily, how much will you
have after 12 years?

2. (4 pts) What equal series of payments must be paid into a sinking fund in order to
accumulate each given amount in the future? (Assume that the first payment is made at
the end of the first payment period). You do not need to calculate the answer, just write
down the formula using the factor ( / , i, N); write down the value of F, i (at least with 2
decimal points) and N in your formula.
(a) $11,000 in 10 years at 8% compounded semiannually when payments are annual.

(b) $35,000 in 5 years at 7% compounded daily when payments are monthly. (Hint:
assume there are 360 days in a year and

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days in a month)

3. (4 pts) You borrowed $12,000 to buy a new car from a bank at an interest rate of 9%
compounded monthly. This loan will be repaid in 48 equally monthly installments over
four years. Immediately after the 20th payment, you desire to pay the remainder of the
loan in a single payment. Compute the amount of this lump-sum payment.