What must be nominal and effective interest rates per year

Reference no: EM13224921

1.Peter Spends $6,000 and in return receives 6 semi annual payments of $1,100 Calculate The effective Interest Rate per year.

2. Joseph starts to make quarterly deposits of $1,500 (at the end of a quarter) into an investment account at the age of 45. If he wants to have $250,000 when he retires at the age of 65, what must be the nominal and the effective interest rates per year?

3.Two alternatives are being considered:
Alt A. Alt B.
initial cost $8500 $6000
Annual benefit $1800 $1500
Useful life, in years 5 10
If the Minimum Attractive Rate Of Return is 9%, which alternative should be selected using Incremental Analysis?

4.Two alternatives are being evaluated, with the projected live of each machine being 10 years. the cash flows are as follows
Alt A. Alt B.
Initial Cost $550,000 $300,000
Annual Maintenance $30,000 $15,000
Annual Benefit $140,000 $95,000
Salvage Value at end of 10 years $50,000 -$6,000
Consider an interest rate of 12% per year. Using annual cash flow analysis, which alternative should be selected?

Reference no: EM13224921

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