A factory costs $500,000. You forecast that it will produce cash inflows of $145,000 in year 1, $205,000 in year 2, and $350,000 in year 3. The discount rate is 10%.

a.What is the value of the factory?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.Is the factory a good investment?

• Yes
• No

a.If you borrow $1,500 and agree to repay the loan in four equal annual payments at an interest rate of 10%, what will your payment be?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.What will your payment be if you make the first payment on the loan immediately instead of at the end of the first year?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

You believe you will need to have saved $460,000 by the time you retire in 40 years in order to live comfortably. If the interest rate is 5% per year, how much must you save each year to meet your retirement goal?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

A store will give you a 1.75% discount on the cost of your purchase if you pay cash today. Otherwise, you will be billed the full price with payment due in 1 month. What is the implicit borrowing rate being paid by customers who choose to defer payment for the month?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

a.How much will $100 grow to if invested at a continuously compounded interest rate of 8% for 8 years?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.How much will $100 grow to if invested at an annual interest rate of 8.00% for 8 years?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

In April 2016 a pound of apples cost $1.42, while oranges cost $1.06. Three years earlier the price of apples was only $1.21 a pound and that of oranges was $.92 a pound.

a.What was the annual compound rate of growth in the price of apples?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b.What was the annual compound rate of growth in the price of oranges?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c.If the same rates of growth persist in the future, what will be the price of apples in 2030?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

d.What about the price of oranges?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

An engineer in 1950 was earning $6,800 a year. In 2015 she earned $88,000 a year. However, on average, prices in 2015 were higher than in 1950. What was her real income in 2015 in terms of constant 1950 dollars? Use the data inTable 5.8.(Round your answer to 2 decimal places.)