a) b) c) d) Question 1 Explain the concept of "Time Value of Money". Why this is important for engineering economy studies Explain the differences between the following, and show how they are related quantitatively: Interest Rate versus Effective Interest Rate Capital Cost versus Capital Recovery Cost a) b) A loan of $120,000 is borrowed for 12 years at an interest rate of 10% per annum. What is the annual repayment of the loan? If after 6 years a lump sum payment of $30,000 is made in addition of the 6th payment. What is the outstanding balance of the loan after 6 years? If a truck has an estimated working life of six years, an initial cost of $60,000 and expected residual value of $9,000. Annual operating cost of this truck is $12,000. What is the equivalent annual cost of owning the truck when considering only the capital investment? The cost of capital to the company is