Reference no: EM13793068

1. Costs for maintenance of buildings at an industrial complex are expected to be $5,000 in year three, $4,800in year four and amounts decreasing by $200 per year thereafter through year nine. At an interest rate of 10% per year, find the present worth of the expenditures using arithmetic gradient formulas.

2. The costs of fuel for a smelting operation are expected to be $50,000 in year three, decreasing by 5% per year thereafter through year ten. At an interest rate of 8% per year, find the equivalent annual cost between years 3 through 10

3. Payments of $1,000 in year two and $4,000 in year five are equivalent to uniform payments in years three through seven at an interest rate of 10% per year. Find the amount of those payments

4. The bond has been purchased for 15,000 dollars. It is a 25-year bond with a $20,000 face value and 8% coupon rate (with interest paid semiannually)? The bond will be kept to maturity. The effective interest rate for MARR rate is 10% per year compounded annually. Should the investor buy the bond. Why?

The data for new and used machines are shown below:

	Used machine	New machine
Initial cost($)	15,000	40,000
Annual operating cost ($/year)	8,000	2,000
Salvage value ($)	5,000	10,000
Life (years)	4	6

5. To compare the machines on the basis of a present worth analysis, calculate the present worth of the machines. Which machine you will pick? Why?

6. the $10.000 investment right now will lead to rate of return (i.e, you might consider as an interest rate) 7% between years 0-3, 8% between years 3-7, and 10% between years 7-10. Calculate the future worth of the investment at the end of year 10.