IE 343 Midterm Exam 1
|
|
- Winifred West
- 5 years ago
- Views:
Transcription
1 IE 343 Midterm Exam 1 Feb 17, 2012 Version A Closed book, closed notes. Write your printed name in the spaces provided above on every page. Show all of your work in the spaces provided. Interest rate tables are provided for you to use in questions that require numerical answers. For problems requiring expressions as answers, carry your solution to the point where the equation for each problem is specified. For example, 1,000 (P/A, 4%, 5) + 2,500 (P/F, 4%, 5) 4,000. If the question asks you to decompose the cash flow into Basic Components, you can only decompose the cash flow into the Seven Basic Components: 1) Single Cash Flow, 2) Annuity, 3) Deferred Annuity, 4) Uniform (Arithmetic) Gradient Series, 5) Deferred Uniform (Arithmetic) Gradient Series, 6) Geometric Gradient Series, 7) Deferred Geometric Gradient Series. Exam 1 has 3 Parts totally 5 Problems with 5 Points: Part I 3 Old Problems, totally 80 Points. The old problems are selected from Homework, Quizzes, Lecture Notes Examples and Textbook Examples with numbers changed. Part II 1 New Problem, 20 Points. Part III 1 Bonus Problem, 5 Points. You are suggested to do Part I first, and then part II. Part III is optional. Version A 1
2 Part (I) 3 Old Problems, totally 80 Points: old problems selected from Homework, Quizzes, Lecture Notes Examples or Textbook Examples Question 1 (20 Points) A company produces a memory chip that is used in manufacturing cell phones. The fixed cost is $5000 per month, and the variable cost is $50 per chip. The selling price per unit is P = 600 5D, where D is monthly demand. Maximum output of the plant is 80 units per month. (a) Determine the demand quantity that maximizes profit per month? (8 Points) (a), so maximizes profits. (b) What is/are the breakeven point(s) of the firm per month? (8 Points) (b) Solving it quadratically, D = or 0 Since maximum output is 80, breakeven can only occur at D =. (c) What is the range of profitable demand per month? (4 Points) (c) Find the values of D which makes. The range is simply (, 80]. Version A 2
3 Question 2 (22 Points) Suppose you took out a bank loan of $,000 at an annual interest rate of 12% compounded quarterly. The loan is repayable over a period of years. Quarterly payments are made at the end of every quarter and the first payment is made at the end of the 1 st quarter. (a) What is the effective interest rate per quarter? (6 Points) (a) For quarterly compounding, the effective interest rate per quarter = nominal interest rate per quarter. So (b) Calculate your quarterly payment? Please refer to the interest rate tables for numerical answers. (8 Points) (b) (c) After making 30 such payments, you could pay a lump sum now (right after the 30 th payment) to close out the loan. How much do you need to pay? Please refer to the interest rate tables for numerical answers. (8 Points) (c) To find out the lump sum amount right after the 30 th payment, we just need to find out the present value of the last payments at the end of the 30 th quarter. Version A 3
4 Question 3 (38 Points) The following two cash flows Cash Flow (A) and Cash Flow (B) are economically equivalent. The effective interest rate is % per period. Please follow the questions to find out the unknown X. Cash Flow (A) A = $2,000 X/3 X/3 X/3 Cash Flow (B) X X X $5,000 (a) What is the present equivalent value of Cash Flow (A). Please refer to the interest rate tables for numerical answers. (6 Points) (a) Version A 4
5 (b) Decompose the Cash Flow (B) into several Basic Components. (9 Points) (b) Cash Flow (B) can be decomposed into 3 Basic Components as follows: Standard Annuity X/3 X/3 X/3 Deferred Annuity X X X Single Cash Flow $5,000 (c) Write an expression in terms of the unknown X: What is the present equivalent value of Cash Flow (B) based on your decomposition from part (b). Just write down the (c) expression like e.g.. You don t need to calculate the final numerical answer. (9 Points) Version A 5
6 (d) Based on your decompositions from part (c), use the interest rate tables to calculate the numerical answer of the present equivalent value in terms of the unknown X. e.g.. (8 Points) (d) From the table, (e) Since Cash Flow (A) and Cash Flow (B) are economically equivalent, solve for X. (6 Points) (e) Since Cash Flow (A) and Cash Flow (B) are economically equivalent, so. Version A 6
7 Part(II), 1 Problems, 20 Points: New Problems Question 4 (20 Points) Consider the following cash flow diagram. Assume the interest rate is % per period. $1,000 $3,000 $2,000 $4,000 $5,000 -$1,000 -$2,000 -$3,000 -$4,000 -$5,000 (a) Decompose the Cash Flow into several Basic Components. (12 Points) (a) The cash flow diagram can be decomposed into the following three Basic Components Single Cash Flow -$5,000 Version A 7
8 Standard Annuity A = -$4,000 Standard Uniform Gradient Series $5,000 $4,000 $3,000 $2,000 $1,000 $9,000 $8,000 $7,000 $6,000 (b) Write an expression: Based on your cash flow decompositions in part (a), what is the annual equivalent value over the -year period given an interest rate of % per period. Just write down the expression like e.g. A = 1,000 (A/P, %, ) + 2,500 (A/F, %, ) 4,000. You don t need to calculate the final numerical answer. (8 Points) (b). Version A 8
9 Part(III), 1 Bonus Problem, 5 Points Question 5 (5 Points) Consider the following cash flow diagram. Assume the interest rate is % per period Write an expression: what is the present equivalent value of the cash-flow diagram? Just write down the expression like e.g. P = 1,000 (P/A, %, ) + 2,500 (P/F, %, ) 4,000. You don t need to calculate the final numerical answer. (5 Points) The cash flow diagram can be decomposed into the following FOUR Basic Components Version A 9
10 Version A
11 Formulas: Roots of a quadratic function:. Find F given P: Find P given F: Find F given A: N (1 i) 1 F A i Find P given A: Find P given G: P G 1 (1 i) N 1 N i i(1 i) N (1 i) N Find A given G: A G 1 i N (1 i) N 1 Find F given G: N 1 (1 i) 1 G NG F G N ( F / A, i%, N) i i i i Present Equivalent Value P of the Geometric Gradient Series: or equivalently Compute effective interest rate when interest compounds more frequently: Version A 11
12 Version A 12
13 Version A 13
14 Version A 14
IE 343 Section 2 - Final Exam
IE 343 Section 2 - Final Exam Dec 12, 2011 Closed book, closed notes. 120 minutes Write your printed name in the spaces provided above on every page. Show all of your work in the spaces provided. Interest
More informationCHAPTER 7: ENGINEERING ECONOMICS
CHAPTER 7: ENGINEERING ECONOMICS The aim is to think about and understand the power of money on decision making BREAKEVEN ANALYSIS Breakeven point method deals with the effect of alternative rates of operation
More informationEngineering Economy Chapter 4 More Interest Formulas
Engineering Economy Chapter 4 More Interest Formulas 1. Uniform Series Factors Used to Move Money Find F, Given A (i.e., F/A) Find A, Given F (i.e., A/F) Find P, Given A (i.e., P/A) Find A, Given P (i.e.,
More informationTIME VALUE OF MONEY. Lecture Notes Week 4. Dr Wan Ahmad Wan Omar
TIME VALUE OF MONEY Lecture Notes Week 4 Dr Wan Ahmad Wan Omar Lecture Notes Week 4 4. The Time Value of Money The notion on time value of money is based on the idea that money available at the present
More informationTime Value of Money and Economic Equivalence
Time Value of Money and Economic Equivalence Lecture No.4 Chapter 3 Third Canadian Edition Copyright 2012 Chapter Opening Story Take a Lump Sum or Annual Installments q q q Millionaire Life is a lottery
More informationIE463 Chapter 2. Objective. Time Value of Money (Money- Time Relationships)
IE463 Chapter 2 Time Value of Money (Money- Time Relationships) Objective Given a cash flow (or series of cash flows) occurring at some point in time, the objective is to find its equivalent value at another
More informationCha h pt p er 2 Fac a t c o t rs r : s : H o H w w T i T me e a n a d I nte t r e e r s e t s A f f e f c e t c t M oney
Chapter 2 Factors: How Time and Interest Affect Money 2-1 LEARNING OBJECTIVES 1. F/P and P/F factors 2. P/A and A/P factors 3. Interpolate for factor values 4. P/G and A/G factors 5. Geometric gradient
More informationME 353 ENGINEERING ECONOMICS Sample Second Midterm Exam
ME 353 ENGINEERING ECONOMICS Sample Second Midterm Exam Scoring gives priority to the correct formulation. Numerical answers without the correct formulas for justification receive no credit. Decisions
More informationFE Review Economics and Cash Flow
4/4/16 Compound Interest Variables FE Review Economics and Cash Flow Andrew Pederson P = present single sum of money (single cash flow). F = future single sum of money (single cash flow). A = uniform series
More informationIE 343 Midterm Exam 2
IE 343 Midterm Exam 2 April 6, 2012 Version A Closed book, closed notes. 50 minutes Write your printed name in the spaces provided above on every page. Show all of your work in the spaces provided. Interest
More informationSchool of Engineering University of Guelph. ENGG*3240 Engineering Economics Course Description & Outline - Fall 2008
School of Engineering University of Guelph ENGG*3240 Engineering Economics Course Description & Outline - Fall 2008 CALENDAR DESCRIPTION Principle of project evaluation, analysis of capital and operating
More informationWhat is Value? Engineering Economics: Session 2. Page 1
Engineering Economics: Session 2 Engineering Economic Analysis: Slide 26 What is Value? Engineering Economic Analysis: Slide 27 Page 1 Review: Cash Flow Equivalence Type otation Formula Excel Single Uniform
More informationIE 343 Midterm Exam 2
IE 343 Midterm Exam 2 Nov 16, 2011 Closed book, closed notes. 50 minutes Write your printed name in the spaces provided above on every page. Show all of your work in the spaces provided. Exam 2 has three
More informationOutline of Review Topics
Outline of Review Topics Cash flow and equivalence Depreciation Special topics Comparison of alternatives Ethics Method of review Brief review of topic Problems 1 Cash Flow and Equivalence Cash flow Diagrams
More informationMath Analysis Midterm Review. Directions: This assignment is due at the beginning of class on Friday, January 9th
Math Analysis Midterm Review Name Directions: This assignment is due at the beginning of class on Friday, January 9th This homework is intended to help you prepare for the midterm exam. The questions are
More informationIE 343 Midterm Exam. March 7 th Closed book, closed notes.
IE 343 Midterm Exam March 7 th 2013 Closed book, closed notes. Write your name in the spaces provided above. Write your name on each page as well, so that in the event the pages are separated, we can still
More informationMath 1070 Sample Exam 2
University of Connecticut Department of Mathematics Math 1070 Sample Exam 2 Exam 2 will cover sections 6.1, 6.2, 6.3, 6.4, F.1, F.2, F.3, F.4, 1.1, and 1.2. This sample exam is intended to be used as one
More informationYou are responsible for upholding the University of Maryland Honor Code while taking this exam.
Econ 300 Spring 013 First Midterm Exam version W Answers This exam consists of 5 multiple choice questions. The maximum duration of the exam is 50 minutes. 1. In the spaces provided on the scantron, write
More informationPage Points Score Total: 100
Math 1130 Spring 2019 Sample Midterm 2b 2/28/19 Name (Print): Username.#: Lecturer: Rec. Instructor: Rec. Time: This exam contains 10 pages (including this cover page) and 9 problems. Check to see if any
More informationJanuary 29. Annuities
January 29 Annuities An annuity is a repeating payment, typically of a fixed amount, over a period of time. An annuity is like a loan in reverse; rather than paying a loan company, a bank or investment
More informationMultiple Compounding Periods in a Year. Principles of Engineering Economic Analysis, 5th edition
Multiple Compounding Periods in a Year Example 2.36 Rebecca Carlson purchased a car for $25,000 by borrowing the money at 8% per year compounded monthly. She paid off the loan with 60 equal monthly payments,
More informationChapter 21: Savings Models Lesson Plan
Lesson Plan For All Practical Purposes Arithmetic Growth and Simple Interest Geometric Growth and Compound Interest Mathematical Literacy in Today s World, 8th ed. A Limit to Compounding A Model for Saving
More informationTime value of money-concepts and Calculations Prof. Bikash Mohanty Department of Chemical Engineering Indian Institute of Technology, Roorkee
Time value of money-concepts and Calculations Prof. Bikash Mohanty Department of Chemical Engineering Indian Institute of Technology, Roorkee Lecture - 13 Multiple Cash Flow-1 and 2 Welcome to the lecture
More informationME 353 ENGINEERING ECONOMICS
ME 353 ENGINEERING ECONOMICS Final Exam Sample Scoring gives priority to the correct formulas. Numerical answers without the correct formulas for justification receive no credit. Decisions without numerical
More informationEngineering Economics
Economic Analysis Methods Engineering Economics Day 3: Rate of Return Analysis Three commonly used economic analysis methods are 1. Present Worth Analysis 2. Annual Worth Analysis 3. www.engr.sjsu.edu/bjfurman/courses/me195/presentations/engeconpatel3nov4.ppt
More information2/22/2017. Engineering Economics Knowledge. Engineering Economics FE REVIEW COURSE SPRING /22/2017
FE REVIEW COURSE SPRING 2017 Engineering Economics Paige Harris 2/22/2017 Engineering Economics Knowledge 4 6 problems Discounted cash flow Equivalence, PW, equivalent annual worth, FW, rate of return
More informationChapter 21: Savings Models
October 14, 2013 This time Arithmetic Growth Simple Interest Geometric Growth Compound Interest A limit to Compounding Simple Interest Simple Interest Simple Interest is interest that is paid on the original
More information(Refer Slide Time: 00:55)
Engineering Economic Analysis Professor Dr. Pradeep K Jha Department of Mechanical and Industrial Engineering Indian Institute of Technology Roorkee Lecture 11 Economic Equivalence: Meaning and Principles
More informationPage Points Score Total: 100
Math 1130 Spring 2019 Sample Midterm 3a 4/11/19 Name (Print): Username.#: Lecturer: Rec. Instructor: Rec. Time: This exam contains 9 pages (including this cover page) and 9 problems. Check to see if any
More informationSCHOOL OF ACCOUNTING AND BUSINESS BSc. (APPLIED ACCOUNTING) GENERAL / SPECIAL DEGREE PROGRAMME
All Rights Reserved No. of Pages - 06 No of Questions - 06 SCHOOL OF ACCOUNTING AND BUSINESS BSc. (APPLIED ACCOUNTING) GENERAL / SPECIAL DEGREE PROGRAMME YEAR I SEMESTER I (Group B) END SEMESTER EXAMINATION
More informationA Formula for Annuities
A Formula for Annuities We ve seen that, with a bit of work, an annuity can be priced by summing geometric sequence. If we apply the geometric sum to a general annuity, we get a formula for annuities:
More informationChapter 2. Time Value of Money (TVOM) Principles of Engineering Economic Analysis, 5th edition
Chapter 2 Time Value of Money (TVOM) Cash Flow Diagrams $5,000 $5,000 $5,000 ( + ) 0 1 2 3 4 5 ( - ) Time $2,000 $3,000 $4,000 Example 2.1: Cash Flow Profiles for Two Investment Alternatives (EOY) CF(A)
More informationLESSON 2 INTEREST FORMULAS AND THEIR APPLICATIONS. Overview of Interest Formulas and Their Applications. Symbols Used in Engineering Economy
Lesson Two: Interest Formulas and Their Applications from Understanding Engineering Economy: A Practical Approach LESSON 2 INTEREST FORMULAS AND THEIR APPLICATIONS Overview of Interest Formulas and Their
More informationChapter 10: The Mathematics of Money
Chapter 10: The Mathematics of Money Percent Increases and Decreases If a shirt is marked down 20% and it now costs $32, how much was it originally? Simple Interest If you invest a principle of $5000 and
More informationChapter 2. Time Value of Money (TVOM) Principles of Engineering Economic Analysis, 5th edition
Chapter 2 Time Value of Money (TVOM) Cash Flow Diagrams (EOY) Example 2.1 Cash Flow Profiles for Two Investment Alternatives End of Year (EOY) CF(A) CF(B) CF(B-A) 0 -$100,000 -$100,000 $0 1 $10,000 $50,000
More informationMath 147 Section 6.4. Application Example
Math 147 Section 6.4 Present Value of Annuities 1 Application Example Suppose an individual makes an initial investment of $1500 in an account that earns 8.4%, compounded monthly, and makes additional
More informationCONTENTS CHAPTER 1 INTEREST RATE MEASUREMENT 1
CONTENTS CHAPTER 1 INTEREST RATE MEASUREMENT 1 1.0 Introduction 1 1.1 Interest Accumulation and Effective Rates of Interest 4 1.1.1 Effective Rates of Interest 7 1.1.2 Compound Interest 8 1.1.3 Simple
More information2016 EXAMINATIONS ACCOUNTING TECHNICIAN PROGRAMME PAPER TC 3: BUSINESS MATHEMATICS & STATISTICS
EXAMINATION NO. 16 EXAMINATIONS ACCOUNTING TECHNICIAN PROGRAMME PAPER TC : BUSINESS MATHEMATICS & STATISTICS WEDNESDAY 0 NOVEMBER 16 TIME ALLOWED : HOURS 9.00 AM - 12.00 NOON INSTRUCTIONS 1. You are allowed
More informationENGM 310 Engineering Economy Lecture Notes (MJ Zuo) Page 1 of 36. Introduction
ENGM 310 Engineering Economy Lecture Notes (MJ Zuo) Page 1 of 36 Introduction 1. Syllabus distributed: Dates of assignments, mid-terms, and final exams specified. (a) Let me know in writing about possible
More informationDEPARTMENT OF MATHEMATICS
DEPARTMENT OF MATHEMATICS Problems from old third exams. The actual exam is expected to have 8 questions. It is recommended that all the following problems be reviewed along with the homework and quizzes.
More informationDEPARTMENT OF MATHEMATICS
DEPARTMENT OF MATHEMATICS Problems from old third exams. The actual exam is expected to have 8 questions. It is recommended that all the following problems be reviewed along with the homework and quizzes.
More informationLECTURE NOTES ON MICROECONOMICS
LECTURE NOTES ON MICROECONOMICS ANALYZING MARKETS WITH BASIC CALCULUS William M. Boal Part 3: Firms and competition Chapter 11: Profit maximization and supply Problems (11.1) [Profit maximization] Indicate
More informationThis homework assignment uses the material on pages ( A moving average ).
Module 2: Time series concepts HW Homework assignment: equally weighted moving average This homework assignment uses the material on pages 14-15 ( A moving average ). 2 Let Y t = 1/5 ( t + t-1 + t-2 +
More informationPage Points Score Total: 100
Math 1130 Autumn 2018 Sample Midterm 2c 2/28/19 Name (Print): Username.#: Lecturer: Rec. Instructor: Rec. Time: This exam contains 8 pages (including this cover page) and 6 problems. Check to see if any
More informationMeasuring Interest Rates
Measuring Interest Rates Economics 301: Money and Banking 1 1.1 Goals Goals and Learning Outcomes Goals: Learn to compute present values, rates of return, rates of return. Learning Outcomes: LO3: Predict
More informationFINANCE, GROWTH & DECAY (LIVE) 08 APRIL 2015 Section A: Summary Notes and Examples
FINANCE, GROWTH & DECAY (LIVE) 08 APRIL 2015 Section A: Summary Notes and Examples There are two types of formula dealt with in this section: Future Value Annuity Formula where: equal and regular payment
More informationMath 101: Exam 2 Review Sheet
Math 101: Exam 2 Review Sheet Exam Date, Time, Locations & Coverage Exam 2 will be given on Friday, November 20, from 8:00-8:50 a.m. You should arrive by 7:50 a.m. Use the following table to determine
More informationSolutions to end-of-chapter problems Basics of Engineering Economy, 2 nd edition Leland Blank and Anthony Tarquin
Solutions to end-of-chapter problems Basics of Engineering Economy, 2 nd edition Leland Blank and Anthony Tarquin Chapter 2 Factors: How Time and Interest Affect Money 2.1 (a) (F/P,10%,20) = 6.7275 (b)
More informationDepartment of Humanities. Sub: Engineering Economics and Costing (BHU1302) (4-0-0) Syllabus
Department of Humanities Sub: Engineering Economics and Costing (BHU1302) (4-0-0) Syllabus Module I (10 Hours) Time value of money : Simple and compound interest, Time value equivalence, Compound interest
More informationENGINEERING ECONOMY. William G. Sullivan. Fourteenth Edition. Prentice Hall. Virginia Polytechnic institute and State University
ENGINEERING ECONOMY Fourteenth Edition William G. Sullivan Virginia Polytechnic Institute and State University, Emeritus Elin M. Wicks Wicks and Associates C. Patrick Koelling Virginia Polytechnic institute
More informationIE463 Chapter 3. Objective: INVESTMENT APPRAISAL (Applications of Money-Time Relationships)
IE463 Chapter 3 IVESTMET APPRAISAL (Applications of Money-Time Relationships) Objective: To evaluate the economic profitability and liquidity of a single proposed investment project. CHAPTER 4 2 1 Equivalent
More informationIE463 Chapter 4. Objective: COMPARING INVESTMENT AND COST ALTERNATIVES
IE463 Chapter 4 COMPARING INVESTMENT AND COST ALTERNATIVES Objective: To learn how to properly apply the profitability measures described in Chapter 3 to select the best alternative out of a set of mutually
More informationThe three formulas we use most commonly involving compounding interest n times a year are
Section 6.6 and 6.7 with finance review questions are included in this document for your convenience for studying for quizzes and exams for Finance Calculations for Math 11. Section 6.6 focuses on identifying
More informationENGINEERING ECONOMIC ANALYSIS
ENGINEERING ECONOMIC ANALYSIS r T ~' ELEVENTH EDITION Donald G. Newnan San Jose State University Ted G. Eschenbach University of Alaska Anchorage Jerome P. Lavelle North Carolina State t University New
More informationECO 2013: Macroeconomics Valencia Community College
ECO 2013: Macroeconomics Valencia Community College Exam 3 Fall 2008 1. The most important determinant of consumer spending is: A. the level of household debt. B. consumer expectations. C. the stock of
More informationModesto Junior College Course Outline of Record MATH 50
Modesto Junior College Course Outline of Record MATH 50 I. OVERVIEW The following information will appear in the 2009-2010 catalog MATH-50 Business Mathematics 3 Units Prerequisite: Satisfactory completion
More informationMath116Chap10MathOfMoneyPart2Done.notebook March 01, 2012
Chapter 10: The Mathematics of Money PART 2 Percent Increases and Decreases If a shirt is marked down 20% and it now costs $32, how much was it originally? Simple Interest If you invest a principle of
More information4: Single Cash Flows and Equivalence
4.1 Single Cash Flows and Equivalence Basic Concepts 28 4: Single Cash Flows and Equivalence This chapter explains basic concepts of project economics by examining single cash flows. This means that each
More informationTime Value of Money. Part III. Outline of the Lecture. September Growing Annuities. The Effect of Compounding. Loan Type and Loan Amortization
Time Value of Money Part III September 2003 Outline of the Lecture Growing Annuities The Effect of Compounding Loan Type and Loan Amortization 2 Growing Annuities The present value of an annuity in which
More informationA Brief Guide to Engineering Management Financial Calculations in ENGM 401 & ENGM 620 Section X1 Fall 2010
A Brief Guide to Engineering Management Financial Calculations in ENGM 401 & ENGM 620 Section X1 Fall 2010 MG Lipsett last updated October 21, 2010 Introduction This document provides concise explanations
More informationLecture 3. Chapter 4: Allocating Resources Over Time
Lecture 3 Chapter 4: Allocating Resources Over Time 1 Introduction: Time Value of Money (TVM) $20 today is worth more than the expectation of $20 tomorrow because: a bank would pay interest on the $20
More information7.5 exponential growth and decay 2016 ink.notebook. February 13, Page 69. Page Exponential Growth and Decay. Standards.
7.5 exponential growth and decay 2016 ink.notebook Page 69 Page 70 7.5 Exponential Growth and Decay Lesson Objectives Standards Lesson Notes Page 71 7.5 Exponential Growth and Decay Press the tabs to view
More informationNotes for Econ FALL 2010 Midterm 1 Exam
Notes for Econ 302-001 FALL 2010 Midterm 1 Exam The Fall 2010 Econ 302-001 course used Hall and Papell, Macroeconomics (Norton) as a textbook. The notation differs from Blanchard, Macroeconomics 5/2 (Pearson).
More informationENSC 201 Assignment 5, Model Answers
ENSC 201 Assignment 5, Model Answers 5.1 Gerry likes driving small cars, and buys nearly identical ones whenever the old one needs replacing. He typically trades in his old car for a new one costing about
More information22.812J Nuclear Energy Economics and Policy Analysis S 04. Classnote: The Time Value of Money
22.812J uclear Energy Economics and Policy Analysis S 04 Classnote: The Time Value of Money 1. Motivating Example To motivate the discussion, we consider a homeowner faced with a decision whether to install
More informationSurvey of Math: Chapter 21: Consumer Finance Savings (Lecture 1) Page 1
Survey of Math: Chapter 21: Consumer Finance Savings (Lecture 1) Page 1 The mathematical concepts we use to describe finance are also used to describe how populations of organisms vary over time, how disease
More informationCHAPTER 4 TIME VALUE OF MONEY
CHAPTER 4 TIME VALUE OF MONEY 1 Learning Outcomes LO.1 Identify various types of cash flow patterns (streams) seen in business. LO.2 Compute the future value of different cash flow streams. Explain the
More information21.1 Arithmetic Growth and Simple Interest
21.1 Arithmetic Growth and Simple Interest When you open a savings account, your primary concerns are the safety and growth of your savings. Suppose you deposit $100 in an account that pays interest at
More informationKey Terms: exponential function, exponential equation, compound interest, future value, present value, compound amount, continuous compounding.
4.2 Exponential Functions Exponents and Properties Exponential Functions Exponential Equations Compound Interest The Number e and Continuous Compounding Exponential Models Section 4.3 Logarithmic Functions
More informationMath 1130 Exam 2 Review SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
Math 1130 Exam 2 Review Provide an appropriate response. 1) Write the following in terms of ln x, ln(x - 3), and ln(x + 1): ln x 3 (x - 3)(x + 1) 2 1) 2) Write the following in terms of ln x, ln(x - 3),
More informationLeland Blank, P. E. Texas A & M University American University of Sharjah, United Arab Emirates
Eighth Edition ENGINEERING ECONOMY Leland Blank, P. E. Texas A & M University American University of Sharjah, United Arab Emirates Anthony Tarquin, P. E. University of Texas at El Paso Mc Graw Hill Education
More informationChapter 7 Rate of Return Analysis
Chapter 7 Rate of Return Analysis 1 Recall the $5,000 debt example in chapter 3. Each of the four plans were used to repay the amount of $5000. At the end of 5 years, the principal and interest payments
More informationDo Not Write Below Question Maximum Possible Points Score Total Points = 100
University of Toronto Department of Economics ECO 204 Summer 2012 Ajaz Hussain TEST 2 SOLUTIONS TIME: 1 HOUR AND 50 MINUTES YOU CANNOT LEAVE THE EXAM ROOM DURING THE LAST 10 MINUTES OF THE TEST. PLEASE
More informationChapter 13 Breakeven and Payback Analysis
Chapter 13 Breakeven and Payback Analysis by Ir Mohd Shihabudin Ismail 13-1 LEARNING OUTCOMES 1. Breakeven point one parameter 2. Breakeven point two alternatives 3. Payback period analysis 13-2 Introduction
More informationPractice Final Exam Fall a) Write the equations for the revenue, cost, and profit functions. Let x be the number of batteries.
Practice Final Exam Fall 2017 1) A manufacturer sells car batteries for $150 each. The company s fixed costs are $45,000 per month, and marginal costs are $55 per battery. a) Write the equations for the
More information3 General Equilibrium in a Competitive Market
Exchange Economy. Principles of Microeconomics, Fall Chia-Hui Chen October, Lecture Efficiency in Exchange, Equity and Efficiency, and Efficiency in Production Outline. Chap : Exchange Economy. Chap :
More informationASC301 A Financial Mathematics 2:00-3:50 pm TR Maxon 104
ASC301 A Financial Mathematics 2:00-3:50 pm TR Maxon 104 Instructor: John Symms Office: Math House 204 Phone: 524-7143 (email preferred) Email: jsymms@carrollu.edu URL: Go to the Courses tab at my.carrollu.edu.
More informationACCTG101 Revision MODULES 10 & 11 LITTLE NOTABLES EXCLUSIVE - VICKY TANG
ACCTG101 Revision MODULES 10 & 11 TIME VALUE OF MONEY & CAPITAL INVESTMENT MODULE 10 TIME VALUE OF MONEY Time Value of Money is the concept that cash flows of dollar amounts have different values at different
More information1) Cash Flow Pattern Diagram for Future Value and Present Value of Irregular Cash Flows
Topics Excel & Business Math Video/Class Project #45 Cash Flow Analysis for Annuities: Savings Plans, Asset Valuation, Retirement Plans and Mortgage Loan. FV, PV and PMT. 1) Cash Flow Pattern Diagram for
More information(for tutoring, homework help, or help with online classes)
www.tutor-homework.com (for tutoring, homework help, or help with online classes) 1 of 25 An explosion causes debris to rise vertically with an initial velocity of 9 feet per second. The function s(t)
More informationIntermediate Macroeconomics: Economics 301 Exam 1. October 4, 2012 B. Daniel
October 4, 2012 B. Daniel Intermediate Macroeconomics: Economics 301 Exam 1 Name Answer all of the following questions. Each is worth 25 points. Label all axes, initial values and all values after shocks.
More informationSolutions to EA-1 Examination Spring, 2001
Solutions to EA-1 Examination Spring, 2001 Question 1 1 d (m) /m = (1 d (2m) /2m) 2 Substituting the given values of d (m) and d (2m), 1 - = (1 - ) 2 1 - = 1 - + (multiplying the equation by m 2 ) m 2
More informationEconomics 318 Health Economics. Midterm Examination II March 21, 2013 ANSWER KEY
University of Victoria Department of Economics Economics 318 Health Economics Instructor: Chris Auld Midterm Examination II March 21, 2013 ANSWER KEY Instructions. Answer all questions. For multiple choice
More informationMicroeconomics of Banking: Lecture 5
Microeconomics of Banking: Lecture 5 Prof. Ronaldo CARPIO Oct. 23, 2015 Administrative Stuff Homework 2 is due next week. Due to the change in material covered, I have decided to change the grading system
More informationSecond Midterm Exam. Portfolio Beta Expected Return X 1 9% Y 2 10% Is there an arbitrage opportunity? If so, what exactly is it?
Second Midterm Exam Fall 018 Econ 180-367 Closed Book. Formula Sheet Provided. Calculators OK. Time Allowed: 1 Hour 15 minutes All Questions Carry Equal Marks 1. (15 points) You invest $100 in a bond that
More informationLecture Notes on Anticommons T. Bergstrom, April 2010 These notes illustrate the problem of the anticommons for one particular example.
Lecture Notes on Anticommons T Bergstrom, April 2010 These notes illustrate the problem of the anticommons for one particular example Sales with incomplete information Bilateral Monopoly We start with
More informationThe University of Western Ontario Department of Statistical and Actuarial Sciences ACTUARIAL SCIENCE 2553A Mathematics of Finance
The University of Western Ontario Department of Statistical and Actuarial Sciences ACTUARIAL SCIENCE 2553A Mathematics of Finance -- 2017-18 Instructor Section Day/Time Location email Office/Phone Mr.
More informationSOLUTION METHODS FOR SELECTED BASIC FINANCIAL RELATIONSHIPS
SVEN THOMMESEN FINANCE 2400/3200/3700 Spring 2018 [Updated 8/31/16] SOLUTION METHODS FOR SELECTED BASIC FINANCIAL RELATIONSHIPS VARIABLES USED IN THE FOLLOWING PAGES: N = the number of periods (months,
More informationSequences, Series, and Limits; the Economics of Finance
CHAPTER 3 Sequences, Series, and Limits; the Economics of Finance If you have done A-level maths you will have studied Sequences and Series in particular Arithmetic and Geometric ones) before; if not you
More informationSOA Exam MFE Solutions: May 2007
Exam MFE May 007 SOA Exam MFE Solutions: May 007 Solution 1 B Chapter 1, Put-Call Parity Let each dividend amount be D. The first dividend occurs at the end of months, and the second dividend occurs at
More information(AA12) QUANTITATIVE METHODS FOR BUSINESS
All Rights Reserved ASSOCIATION OF ACCOUNTING TECHNICIANS OF SRI LANKA AA1 EXAMINATION - JULY 2016 (AA12) QUANTITATIVE METHODS FOR BUSINESS Instructions to candidates (Please Read Carefully): (1) Time
More informationCourse Description: Statement of Goals:
Chesapeake College Wye Mills, MD 21679 Course of Study ACC 203 Section 201 Intermediate Accounting I, 3 credit hours Fall 2012 Tuesdays 6:30pm-9:15pm, 8/28/2012 12/4/2012 Instructor: Tracy Brinckerhoff,
More informationEngineering Economics
Time Value of Money Engineering Economics CE 215 2003 Richard J. ielsen Time affects the cost of money. o A dollar now is worth more than a dollar a year from now because it can earn interest during the
More informationKeynesian Theory (IS-LM Model): how GDP and interest rates are determined in Short Run with Sticky Prices.
Keynesian Theory (IS-LM Model): how GDP and interest rates are determined in Short Run with Sticky Prices. Historical background: The Keynesian Theory was proposed to show what could be done to shorten
More informationSTRAIGHT-LINE (SL) METHOD
STRAIGHT-LINE (SL) METHOD A constant amount is depreciated each year over the asset's life. N = depreciable life of the asset in years. d k = annual depreciation deduction in year k d k = (B - SV N ) /
More informationBasics. 7: Compounding Frequency. Lingua Franca (Language of the Trade) 7.1 Nominal and Effective Interest. Nominal and Effective.
Basics 7: Compounding Frequency Compounding frequency affects rate of growth of savings or debt $1 after 1 year at 18% per year compounded annually $118. $1 after 1 year at 18% per year compounded monthly
More informationtroduction to Algebra
Chapter Six Percent Percents, Decimals, and Fractions Understanding Percent The word percent comes from the Latin phrase per centum,, which means per 100. Percent means per one hundred. The % symbol is
More informationTime value of money-concepts and Calculations Prof. Bikash Mohanty Department of Chemical Engineering Indian Institute of Technology, Roorkee
Time value of money-concepts and Calculations Prof. Bikash Mohanty Department of Chemical Engineering Indian Institute of Technology, Roorkee Lecture 09 Future Value Welcome to the lecture series on Time
More informationChapter 2 Time Value of Money ANSWERS TO END-OF-CHAPTER QUESTIONS
Chapter 2 Time Value of Money ANSWERS TO END-OF-CHAPTER QUESTIONS 2-1 a. PV (present value) is the value today of a future payment, or stream of payments, discounted at the appropriate rate of interest.
More informationMcGILL UNIVERSITY FACULTY OF SCIENCE DEPARTMENT OF MATHEMATICS AND STATISTICS MATH THEORY OF INTEREST
McGILL UNIVERSITY FACULTY OF SCIENCE DEPARTMENT OF MATHEMATICS AND STATISTICS MATH 329 2004 01 THEORY OF INTEREST Information for Students (Winter Term, 2003/2004) Pages 1-8 of these notes may be considered
More information