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This Study Resource Was: ECT 7230 Engineering Economics Suggested Solutions For Assignment 2

This document contains solutions to engineering economics assignment questions. It includes the calculations to determine: 1) Monthly car payments of $775.16 for a $24,000 loan with 0.5% monthly interest and a 12 month deferred payment period followed by 36 monthly payments. 2) The remaining balance of $3,269.12 on a $100,000 loan with 8% annual interest after 12 years of increasing annual payments from $8,880 to $26,640. 3) The uniform annual deposit of $437.14 that needs to be made from ages 5 to 15 into an account earning 8% interest to withdraw $2,000 at age 18 and $400 each year from

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104 views

This Study Resource Was: ECT 7230 Engineering Economics Suggested Solutions For Assignment 2

This document contains solutions to engineering economics assignment questions. It includes the calculations to determine: 1) Monthly car payments of $775.16 for a $24,000 loan with 0.5% monthly interest and a 12 month deferred payment period followed by 36 monthly payments. 2) The remaining balance of $3,269.12 on a $100,000 loan with 8% annual interest after 12 years of increasing annual payments from $8,880 to $26,640. 3) The uniform annual deposit of $437.14 that needs to be made from ages 5 to 15 into an account earning 8% interest to withdraw $2,000 at age 18 and $400 each year from

Uploaded by

Mel Capalungan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ECT 7230

Engineering Economics
Suggested Solutions for Assignment 2

Q4-28. Kris borrows money in her senior year to buy a new car. The car dealership
allows her to defer payments for 12 months, and Kris makes 36 end-of-month
payments thereafter. If the original note (loan) is for $24,000 and interest is ½% per
month on the unpaid balance, how much will Kris’ payments be?

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Solution by hand:

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A= $24,000*(F/P, 0.5%, 12)*(A/P, 0.5%, 36)

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=$775.16.

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rs e
Q4-39. An individual is borrowing $100,000 at 8% interest compounded annually.
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The loan is to be repaid in equal annual payments over 30 years. However, just after
the eighth payment is made, the lender allows the borrower to triple the annual
payments. The borrower agrees to this increased payment. If the lender is still
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charging 8% per year, compounded annually, on the unpaid balance of the loan, what
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is the balance still owed just after the twelfth payment is made?

Solution by hand:
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Original payments = A = $100,000 (A/P, 8%, 30)=$8,880


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Balance at EOY 8 = $100,000 (F/P, 8%, 8) - $8,880 (F/A, 8%, 8)


= $100,000 (1.8509) - $8,880 (10.6366)
= $90,636.99
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Or P 8 =$8,880 (P/F, 8%, 22) = $8,880(10.2007)=$90636.99


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New payment = $8,880 *3 =$26,640


Balance at EOY 12 = $90,636.99 (F/P, 8%, 4) - $26,640 (F/A, 8%,4)
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= $90,636.99 (1.3605) - $26,640 (4.5061)


=$ 3,269.12

Q4-61. Suppose that the parents of a young child decide to make annual deposits into
a saving account, with the first deposit being made on the child’s 5th birthday and the
last deposit being made on the 15th birthday. Then, starting on the child’s 18th birthday,
the withdrawals as shown will be made. If the effective annual interest rate is 8%

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during this period of time, what are the annual deposits in years 5 through 15? Use a
uniform gradient amount (G) in your solution. Please see the following figure.

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er as
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Solution by hand:

eH w
o.
A= [$2,000 (P/A, 8%, 4) +$400 (P/G, 8%, 4)] (P/F, 8%, 2) (A/F, 8%, 11)
rs e
= [$2,000(3.3121)+$400(4.650)](0.8573)(0.0601)=$437.14
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aC s
vi y re
ed d
ar stu
is
Th
sh

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