You are buying a new car and can pay $15,000 cash today or pay $350 per month for 60 mont… Show more QUESTION 1 You are buying a new car and can pay $15,000 cash today or pay $350 per month for 60 months. If the annual interest rate is 12%, which alternative has the lower PWc? a. both have the same PWc b. cannot be determined from the information given. c. $15,000 today d. $350 per month for 60 months QUESTION 2 You can buy a new sorting machine for $15,000. Annual operation and maintenance will cost $6000 which is $8000 less than current costs. You expect to sell the machine for $2000 at the end of 10 years. If i= 8%: a. PWc = $15,000 b. PWc = $15,000 + 6000(P/A,8%,10) – 2000(P/A,8%,10) c. PWc = $15,000 + 6000(P/A,8%,10) + 2000(P/F,8%,10) d. PWc = $15,000 + 6000(P/A,8%,10) – 2000(P/F,8%,10) QUESTION 3 You can buy a new sorting machine for $15,000. Annual operation and maintenance will cost $6000 which is $8000 less than current costs. You expect to sell the machine for $2000 at the end of 10 years. If i= 8%: a. PWb = 8000 b. PWb = 8000(P/A,8%,10) c. PWb = 14000 d. PWb = 14000(P/A,8%,10) QUESTION 4 You can buy a new sorting machine for $15,000. Annual operation and maintenance will cost $6000 which is $8000 less than current costs. You expect to sell the machine for $2000 at the end of 10 years. Should you buy this machine if i = 8%? a. Yes, because NPW > 0 b. Yes, because NPW < 0 c. No, because NPW > 0 d. No, because NPW < 0 QUESTION 5 You consider purchasing a computer system for $12,000. Annual upgrades will cost $500. Your expected salvage value is $1000 at the end of 5 years. The system is faster and will save you $4000 per year over your current system. If the interest rate = 10%: a. EUAC = 12000 + 500(P/A,10%,5) - 1000(P/F,10%,5) b. EUAC = 12000(A/P,10%,5) + 500 - 1000(A/F,10%,5) c. EUAC = 12000(A/P,10%,5) - 500 - 1000(A/F,10%,5) d. EUAC = 12000(A/P,10%,5) - 500 + 1000(A/F,10%,5) QUESTION 6 You consider purchasing a computer system for $12,000. Annual upgrades will cost $500. Your expected salvage value is $1000 at the end of 5 years. The system is faster and will save you $4000 per year over your current system. If the interest rate = 10%: a. EUAC = $1562 b. EUAC = $2802 c. EUAC = $3502 d. EUAC = $3719 QUESTION 7 You consider purchasing a computer system for $12,000. Annual upgrades will cost $500. Your expected salvage value is $1000 at the end of 5 years. The system is faster and will save you $4000 per year over your current system. If the interest rate = 10%: a. EUAB = $500 b. EUAB = $1000 c. EUAB = $2400 d. EUAB = $4000 QUESTION 8 You consider purchasing a computer system for $12,000. Annual upgrades will cost $500. Your expected salvage value is $1000 at the end of 5 years. The system is faster and will save you $4000 per year over your current system. If the interest rate = 10%, should you purchase the computer system? a. Yes, because B/C > 1 b. Yes, because B/C < 1 c. No, because B/C > 1 d. No, because B/C < 1 QUESTION 9 A successful alumna donates $500,000 to the OIT scholarship fund. If i = 6%, how much money can be given to worthy students each year without reducing the $500,000 principal? a. $8333 b. $15,000 c. $30,000 d. $50,000 QUESTION 10 A successful OIT graduate wants to set up an endowment that will pay $50,000 per year forever for maintenance of her favorite m,ountain bike trail. If the interest rate is 5%, how much must she set aside today to fund this endowment? a. $25,000 b. $50,000 c. $500,000 d. $1,000,000 QUESTION 11 You earn $65,000 in 2012. What will your salary be at the end of 2017 if your salary increases by 6% per year? a. $68,900 b. $73,604 c. $86,985 d. $87,106 QUESTION 12 If you spend $5,000 on gasoline this year and prices increase 20% per year for the next three years, how much will you pay 3 years from now assuming you keep the same vehicle and drive the same number of miles? a. $5,306 b. $8,640 c. $12,539 d. $14,633 • Show less