Profits from recycling paper, cardboard, aluminum, and glass at a liberal arts college have increased at a constant rate of $1,100 in each of the past three years. If this year's profit (at the end) is expected to be $6,000 and the trend continues through year 5, a) what will the profit be at the end of year 5 and b) what is the present value of the profit at an interest rate of 8% per year?

Profits from recycling paper, cardboard, aluminum, and glass at a liberal arts college have increased at a constant rate of $1,100 in each of the past three years. If this year's profit (at the end) is expected to be $6,000 and the trend continues through year 5, a) what will the profit be at the end of year 5 and b) what is the present value of the profit at an interest rate of 8% per year?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

In five years, a salary of $56,000 per year with a 5% growth due to cost-of-living adjustment in the fifth year would be $____. The same salary, with a 1% growth due to cost-of-living adjustment compounded yearly, would be $___ in five years.
Tuition at a local college is currently $4,000 per year. If tuition rates are expected to increase at an annual rate of 3%, what will the annual tuition be 19 years from now?
Assume that your father is now 50 years old and plans to retire after 10 years from now. He is expected to live for another 25 years after retirement. He wants a fixed retirement income of Rs. 5,00,000 per annum. His retirement income will begin the day he retires, 10 years from today, and then he will get 24 additional payments annually. Your father has current savings of Rs. 10,00,000 and he expects to earn a return on his savings @ 10% p.a., annually compounding. How much (to the nearest of rupee) must your father save during each of next 10 years to meet his retirement goal?
Suppose you start saving for retirement when you are 30 years old. You invest $5,000 the first year and increase this amount by 2% each year to match inflation for a total of 15 years. The interest rate is 7% per year. How much money will you have saved when you are 45 years old? Click the icon to view the interest and annuity table for discrete compounding when i = 2% per year. Click the icon to view the interest and annuity table for discrete compounding when i= 7% per year. When you are 45 years old, you will have saved $ (Round to the nearest dollar.)
A cash flow at time zero (now) of $14,551 is equivalent to another cash flow that is an EOY annuity of $2,700 over seven years (starting at year 1). Each of these two cash-flow series is equivalent to a third series, which is a uniform gradient series. What is the value of G for this third series over the same seven-year time interval? Assume that the cash flow at the end of year one is zero. ..... Choose the correct answer below. A. $989 B. $785 C. $392 D. $1,450 O E. Not enough information given.
A rich donor gives a hospital $950,000 one year from today. Each year after that, the hospital will receive a payment 6% larger than the previous payment, with the last payment occurring in ten years' time. What is the present value (PV) of this donation, given that the interest rate is 10%?
An investor (owner) has an option to purchase a tract of land that will be worth $10,000 in six years. If the value of the land increases at 8% each year, how much should the investor be willing to pay now for this property?
An investor (owner) has an option to purchase a tract of land that will be worth $20,000 in ten years. If the value of the land increases at 8% each year, how much should the investor be willing to pay now for this property?
At what simple interest rate:a) Will $20,000.00 rise to $21,100.00 in one year?b) Will $720,000.00 rise to $744,000.00 in 10 months?
In 1915, Anas allegedly borrowed 7,000$ from a large New York bank on the condition that he would repay 7% of the loan every three months, until a total of 50 payments had been made. At the time of the 50th payment, the 7,000$ loan would be completely repaid. Anas computed his annual interest rate to be (0.07 x 7,000 x 4) ÷ 7,000 = 28%. What true effective annual interest rate did Anas pay? And what went wrong ?
Amy Parker, a 22-year-old and newly hired marine biologist, is quick to admit that she does not plan to keep close tabs on how her 401(k) retirement plan will grow with time. This sort of thing does not really interest her. Amy’s contribution, plus that of her employer, amounts to $2,200 per year starting at age 23. Amy expects this amount to increase by 3% each year until she retires at the age of 62 (there will be 40 EOY payments). What is the compounded future value of Amy’s 401(k) plan if it earns 5% per year?
It is estimated that a copper mine will produce 10,000 tons of ore during the coming year. Production is expected to increase by 5% per year thereafter in each of the following six years. Profit per ton will be $14 for years one to seven. a. Draw a cash flow diagram for this copper mine operation from the company's viewpoint. b. If the company can earn 10% per year on its capital, what is the equivalent of the coppermines cashflow in year seven?