He has $10,000 to put in the bank and finds the following offers for a certificate of deposit (CD): Cost of CD Payoff of CD $3,000 Rate per Period 1.25% quarter Life of CD [yr] 1 Bank Bank of the 1% Bank of the Chase West Capital 1 of Whynot West Star United Federal Credit Union of Why Why Bank of Why $2,000 0.79% month 2 $5,000 $5,000 10.00% year 5.05% half year NIN To start his quarry, he needs to purchase rock digging systems. There are 3 options on the market. Unit Rock and Roller Bigger and Boulder 15 25 C Starter 33 $K 14 9 14 Cost of equipment Material and labor savings per year AOC Life Scrap 8 6 1.5 6 8 2.5 6 7 3.3 $K $K yrs $K One machine needed for Cold Mountain is a Diamond Cutting Diamond Cutter, which costs $40,000 to purchase and $10,000 per year to operate. The operating costs increase by 10% per year every year after year 1. The machine has no salvage value, and a 20-year life. Cuauhtemoc got himself into some trouble with Hugo the Enforcer after a Faustian bargain. He owes him $2000, plus interest, and Hugo has given Cuauhtemoc 3 options: (A.) 1% per month or (B.) 3.5% per quarter or (C.) Cuauhtemoc loses all his teeth (he has 32 of them). Each tooth is worth $70 in PW to Cuauhtemoc (including pain and suffering, dental costs, etc). Considering Cuauhtemoc survives his experience with Hugo and his appreciation for his teeth and life are deepened, he will expand his business by providing free sand from his quarry for kids' playgrounds. He has three options for sand machines: Costs for Machine A: Costs for Sand Machine A [in $K] 40 35 35 29.24 30 25 20 26.58 24.17 21.97 19.97 18.16 16.51 15.01 13.64 12.40 11.27 10.25 15 10 7 7 7 7.70 8.479.32 5 li 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 [note that there appears to be an increase of 10% per year in costs after year 5] Costs for Machine B: Costs for Sand Machine B [in $K] 40 35 35 32.55 30 28.30 24.61 25 21.40 20 18.61 16.18 14.07 12.24 10.64 15 9.25 10 8.05 7.00 6.08 4.60 5.29 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 [note that there appears to be an increase of 15% per year in costs after year 5] Costs for Machine C: Costs for Sand Machine B [in $K] 60 50 50 40.00 40 30 20 21.23 18.46 16.05 13.96 12.14 10.55 10 9.18 3 3 3 3 3 3.45 3.97 4.56 5.25 6.03 6.94 7.98 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 [note that there appears to be an increase of 15% per year in costs after year 5) 5. If the purchase price of the Diamond Cutting Diamond Cutter remains the same, when should a new one be purchased? If you should wait until the end of its life then enter 20. Otherwise enter the year when a new one should be bought He has $10,000 to put in the bank and finds the following offers for a certificate of deposit (CD): Cost of CD Payoff of CD $3,000 Rate per Period 1.25% quarter Life of CD [yr] 1 Bank Bank of the 1% Bank of the Chase West Capital 1 of Whynot West Star United Federal Credit Union of Why Why Bank of Why $2,000 0.79% month 2 $5,000 $5,000 10.00% year 5.05% half year NIN To start his quarry, he needs to purchase rock digging systems. There are 3 options on the market. Unit Rock and Roller Bigger and Boulder 15 25 C Starter 33 $K 14 9 14 Cost of equipment Material and labor savings per year AOC Life Scrap 8 6 1.5 6 8 2.5 6 7 3.3 $K $K yrs $K One machine needed for Cold Mountain is a Diamond Cutting Diamond Cutter, which costs $40,000 to purchase and $10,000 per year to operate. The operating costs increase by 10% per year every year after year 1. The machine has no salvage value, and a 20-year life. Cuauhtemoc got himself into some trouble with Hugo the Enforcer after a Faustian bargain. He owes him $2000, plus interest, and Hugo has given Cuauhtemoc 3 options: (A.) 1% per month or (B.) 3.5% per quarter or (C.) Cuauhtemoc loses all his teeth (he has 32 of them). Each tooth is worth $70 in PW to Cuauhtemoc (including pain and suffering, dental costs, etc). Considering Cuauhtemoc survives his experience with Hugo and his appreciation for his teeth and life are deepened, he will expand his business by providing free sand from his quarry for kids' playgrounds. He has three options for sand machines: Costs for Machine A: Costs for Sand Machine A [in $K] 40 35 35 29.24 30 25 20 26.58 24.17 21.97 19.97 18.16 16.51 15.01 13.64 12.40 11.27 10.25 15 10 7 7 7 7.70 8.479.32 5 li 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 [note that there appears to be an increase of 10% per year in costs after year 5] Costs for Machine B: Costs for Sand Machine B [in $K] 40 35 35 32.55 30 28.30 24.61 25 21.40 20 18.61 16.18 14.07 12.24 10.64 15 9.25 10 8.05 7.00 6.08 4.60 5.29 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 [note that there appears to be an increase of 15% per year in costs after year 5] Costs for Machine C: Costs for Sand Machine B [in $K] 60 50 50 40.00 40 30 20 21.23 18.46 16.05 13.96 12.14 10.55 10 9.18 3 3 3 3 3 3.45 3.97 4.56 5.25 6.03 6.94 7.98 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 [note that there appears to be an increase of 15% per year in costs after year 5) 5. If the purchase price of the Diamond Cutting Diamond Cutter remains the same, when should a new one be purchased? If you should wait until the end of its life then enter 20. Otherwise enter the year when a new one should be bought