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What is the nominal interest rate

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1. What are three the non-economic issues associated with any comparison of alternatives? Explain why each is important to the customer and to the design engineer?

2. $10,000 is invested at an interest rate of 5.0% per year compounded annually:

-What is the nominal interest rate?

-For one year, what is the effective interest rate?

-For one month, what is the effective interest rate?

-Far a quarter, what is the effective interest rate?

-For four months, what is the effective interest rate?

3. Your bank charges you interest on your credit card of 0.5% compounded per month

-What is the nominal interest rate?

-What is the effective annual interest rate?

-What is the effective quarterly interest rate?

-What is the effective monthly interest rate?

4. Create a cash flow diagram for the following engineering development scenerio

-A company buys a machine for $100,000

-Maintenance is expected to be $1,000 per year

-The life of the machine is expected to be 10 years

-Revenues should be $5,000 every six months

-The labor costs are $2,000 a month

-At the end of 10 years, the machine should be worth no more than $25,000

Reference no: EM133069395

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