Question
1. Kevin is looking to get his undergraduate degree after working for several years. He considered starting school during the pandemic because the interest rates
1. Kevin is looking to get his undergraduate degree after working for several years. He considered starting school during the pandemic because the interest rates on student loans dropped to a low of 3.37 percent APY. During the pandemic, he estimated that his total loan would be $36920 with uniform monthly payments for 5 years.
Now, he must pay back his loan at the current national average interest rate of a nominal 6.83 percent per year compounding monthly.
a) Calculate the monthly payments for the mortgage for the given period.
b) Calculate the maximum student loan he could afford today with identical monthly payments at the new higher rate.
2. You want to start a new a tidal power energy company in Philadelphia. To start your business, you will need purchase an industrial machine for a total of $115888. Your estimated sales are 153 tidal systems yearly. You plan to sell the tidal systems for $127.65 in year 1 with prices increasing by 4.45 percent each year. The industrial machine has a salvage value of $18821 in year 13. The machine requires maintenance of $2140.00 in year 1.
Maintenance costs will increase by $682.00 each year. Your TVOM is 11 percent.
Calculate the discounted payback period benefit cost ratio of the investment and determine if the investment is justified.
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