Homework 9 .
1. A twenty year old student decided to set aside $100 on his 21st birthday for investment. Each
subsequent year through his 55th birthday. He plans to increase the sum for investment on a
$100 aritmetic gradient. He will not set aside additional money after his 55th birthday. If he
can achieve a 12% rate of return on his investment, how much will he accured on his 65th
birthday
2. Consider three mutually exclusive alternatives
Year
Buy X
Buy Y
Do nothing
0
-100.0
-50.0
0
1
+31,5
+16,5
0
2
+31,5
+16,5
0
3
+31,5
+16,5
0
4
+31,5
+16,5
0
Which alternatives should be selected
a. If the minimum attractive rate of return equals 6%
b. If MARR = 9%
c. If MARR=10%
d. If MAR=14%
3. Consider the following alternatives
A
B
C
Initial Cost
$300
$600
$200
Uniform annual
benefit
41
98
35
Each alternatives has a ten year useful life and no salvage value. If the MARR is 8%, which
alternative should be selected