Read Chapter # 10 –The Mathematics of Money. Pages 171 – 194.
And answer the following questions in Word (include your name, date, term and course code and name):
10.1 If your credit card’s APR is 24% compounded daily, what is the effective annual interest rate that you are paying?
10.2 Explain why is it that sunk costs are not considered in the analysis of investment alternatives.
10.4 What is the future value 8 years from, of $ 2,000 invested today at a periodic interest rate of 12% compounded annually?
10.5 What would be the result of the previous problem, if simple interest were used?
10.6 You must decide between job offers from CPM Construction and Fudd Associates. Both companies concentrate on sustainable commercial construction, have similar fringe benefits and offer comparable salary increases. CPM Construction offers you a $20,000 sign-up bonus, while Fudd Associates will give you $30,000 after 3 years in the job. Which offer would you take? Why? Consider Engineering Economy principles in your explanation.
10.13 CPM Construction plans to buy a truck for $150,000, and sell it for $15,000 at the end of five years. The annual operating cost of the vehicle is $60,000. What is the equivalent annual cost of this truck, if the company uses a MARR of 12%?
10.14 What is the present value of the truck described above?