HW2 – 10 Marks

Please answer the following questions , and show your work by using at least one of the following methods
ones ( calculation formula, Excel spreadsheet, tables ) .
2.1.12.2 How much can Haydon Rheosystems, Inc., afford to spen d now on an energy management
system if the software will save the company $21,300 per year for the next 5 years? Use an interest rate of
10% per year.

2.3 A family that won a $100,000 prize on America’s Funniest Home Videos decided to put one-half of the
money in a college fund for their child who was responsible for the prize. If the fund earned interest at 6%
per year, how much was in the account 14 years after it was started?

2.4 The amount of money that Diamond Systems can spend now for improving productivity in lieu of
spending $30,000 three years from now at an interest rate of 12% per year is closest to:
(a) $15,700
(b) $17,800
(c) $19,300
(d) $21,350

2.5 The cost of lighting and maintaining the tallest smokestack in the United States (at a shuttered
ASARCO refi nery) is $90,000 per year. At an interest rate of 10% per year, the present worth of maintaining
the smokestack for 10 years is closest to:
(a) $1,015,000
(b) $894,000
(c) $712,000
(d) $553,000
HW2 – 10 Marks
2.6 An engineer who believed in “save now and play later” wanted to retire in 20 years with $1.5 million.
At 10% per year interest, to reach the $1.5 million goal, starting 1 year from now, the engineer must annually
invest:
(a) $26,190
(b) $28,190
(c) $49,350
(d) $89,680