I. If you borrow $4,000 at 6% simple interest per year for five years. How much wil you have to repay at the end of five years? How much interest you paid at the end of five years? (5 ptos) 2. Replacement Analysis BTCF Machine A was purchased three years ago for $12,000 and had an estimated market value of $1,000 at the end of its 10-year life. Annual operating costs are $1,500. The machine wil perform satisfactorily for the next seven years. A salesman for another company is offering machine B for $60,000 with a market value of $5,000 after 10 years. Annual operating costs will be $800. Machine A could be sold now for $8,000, and the MARR is 6% per year. (20ptos) a. Using the outsider iewoint, what is the equivalent annual cost of continuing to use Machine A? Using the outsider viewpoint, what is the equivalent annual cost of buying Machine B? Should Machine A be replaced with Machine B? b. c. 3. The city council of Morristown is considering the purchase of one new fire truck. The options are Truck X and Truck Y. The appropriate financial data are as follows: (15ptos) Fire-TruckX Capital Investment Maintenance Cost/yr Operating Cost/yr Useful life Benefits yr $50,000 $64,000 $75,000 6,000yr 5,000yr 5,000y 2,500y 1,500l 1,000lyr 5 years 5 years 5 years $40,000lyr $42.000lyr $45,000lyr The purchase is to be financed by money borrowed at 6% per year Use this information to answer the following: What is the Conventional AW . Benefit Cost Ratio forFire-Truck X, Y and Z? What is the Incremental Analysis Benefit Cost Ratio for Fire-Truck X, Y and Z? Which Fire-Truck should be purchase? a. b. c. - ternative. Assume MARR TCF of 10% 4. Can we consider this new machine as a viable a More information below. Use PW analysis. (10ptos) Alternative-1 Capital Investment Annual Revenues Annual Expense $40,000 $3,000lyr (from the second (2) to six (6) year) $1,500lyr (from the first to eight year) and (Geometric Series) from the fourth year an increase by 5% until the 6 year. 8years $2,500 Useful life (years) Market value at the end of year 8 A $5,000 face value bond matures in six years and pays 4% per year payable semiannually. An investor wants a .8% retum per year computed semiannually a. How much should the investor pay for the bond? (5ptos) 0 5 6. Suppose that a firm wishes to create an endowment for a laboratory. It will earn an interest of 6% per year. Cash requirement are estimated to be $150,000 to establish it) $40,000 per year indefinitely. Also 30,000 every fourth year and $50,000 every ten years for equipment replacement indefinitely a. What amount of endowment principal requirements? (5ptos)