Equivalent annual cost-amortization method

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1. Compute the present value of $10,000 to be received in 30 years, if the interest of 8% per year is compounded quarterly.

Enter your number as a whole number

2. A department store offers the following credit terms on a new appliance "slashed" to a price of $420: only $40 down, and the balance in 24 monthly installments of $25. What monthly interest rate is the company implicitly charging its credit customers? Enter your answer as a whole number

3. Equivalent Annual Cost (EAC) (The Amortization Method) Your golf course has the opportunity to choose between two mowers.

Choice #1 costs $75,000 and is expected to last 5 years.

Choice #2 costs $100,000 and is expected to last 7 years. Typically, the golf course earns a return of 12% on this type of investment.

Determine the Equivalent Annual Cost (EAC) for choice #1. Round your answer to the nearest dollar

4. Equivalent Annual Cost (EAC) (The Amortization Method, see Module page 11.4) Your golf course has the opportunity to choose between two mowers.

Choice #1 costs $75,000 and is expected to last 5 years.

Choice #2 costs $100,000 and is expected to last 7 years. Typically, the golf course earns a return of 12% on this type of investment.

Determine the Equivalent Annual Cost (EAC) for choice #2. Round your answer to the nearest dollar.

Reference no: EM131896781

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