Engineering Economy - Annuity
Sample Problems Engineering Economy...
1. What is the future worth of Php 600 deposited at the end of every month for four years if the interest rate is 12% compounded quarterly?
2. A farmer bought a tractor costing Php 12,000 if paid in cash. The tractor may be purchased by installment to be paid within 5 years. Money is worth 8% compounded annually. Determine the the amount of each annual payment if all payments are made: a. At the end of each of the 5 years, and b. At the beginning of each of the 5 years.
3. A man owes Php 10,000 with interest at 6% payable semi-annually. What equal payments at the beginning of each months for 8 years will discharge his debt?
4. A person buys a piece of property for Php 100,000 down payment and ten deferred semi-annual payments of Php 8,000 each starting three years from now. What is the
present value of the investment if the rate of interest is 12% compounded semiannually?
5. During the first 5 years, Php 3,000 was spent each year, during the second 5 years, Php 5,000 each year was spent. In addition, Php 8,000 was spent for overhauling at the end of the fourth year, and Php 10,000 also for overhauling at the end of ninth year. If the money is worth 9% compounded annually, what was the equivalent uniform annual cost the ten-year period?
6. On the day of his grandson was born, a man deposited to a trust company a sufficient amount of money so that the boy could receive five annual payments of Php 10,000 each of his college tuition fees, starting with his 18 th birthday. Interest at
the rate of 12% per annum was to be paid on all amounts on deposit. There was also a provision that a grandson could elect not withdraw annual payments and receive a single lump amount on his 25th birthday. The grandson chose his option. a. How much did the boy receive as a single payment? b. How much did the grandfather deposit?
7. A Filipino contractor in the Middle East plans to purchase a new office building costing Php 1,000,000. He agrees to pay Php 150,000 annually for 20 years. At the end of this time he estimates that he can resell the building for at least Php 600,000. Instead of buying the building he can lease it for Php 140,000 a year. All payments are made at the beginning of each year and the rate of interest is 10%. Should the contractor purchase or lease the building?
8. A certain annuity pays Php 80 at the end of every 3 months. If the present value of the annuity is Php 1,200 and the accumulated amount is Php 2,000, determine the nominal rate.
9. To maintain the LRT, it is required to have Php 100,000 at the end of 5 years and annually thereafter. If money is worth 5%, determine the cost of all future maintenance.
10.What amount of money invested today at 15% interest can provide the following scholarships: a. Php 30,000 at the end of each year for 6 years? b. Php 40,000 for the next 6 years? c. Php 50,000 thereafter?