PART II - (60 pts.) . 1. A local car wash charges $3.00 per wash or the option of paying $12.95 for 5 washes, payable in advance with the first wash. If you normally washed your car once a month, would the option be worthwhile if your Minis attractive Rate of Return (MARR) is 29% compounded annually? A person borrows $5,000 at an interest rate of 18% compounded monthly. Monthly payments of $180.76 are agreed upon. (a) What is the length of the loan? (Hint: It is an integral number of years.) (b) What is the total amount that would be required at the end of the sixth month to payoff the entire balance? 3. The returns for a business for five years are as follows: $8,250; $12, 600; $9,750; $21,450 and $14,500. If the value of the money is 12%, what is the equivalent uniform annual benefit for the five-year period? I have borroved $1000 from the bank. The interest rate I am to pay is 20%, compounded monthly. I am to repay the loan by making 24 equal monthly payments. What is the amount of my monthly payments? 5. Tony invested $15,000 in a high yield account. At the end of 30 years he closed the account and received $539,250. Compute the effective interest rate he received on the account. A large bakery is considering three alternative Investments for beat year. They were identified by the processing engineering department to be important feasible projects that merit evaluation. They calculated they spent $5,600 in the last 6 months gathering the following information: Project A Protect 3 Protect Dough-forming Improve Process Automation Zipment Packaging Cost of Equipment $80, 400 $47,800 - $75,450 Installation Costs 25,000 20,000 40,000 Expected Annual Savings 22,600 15,100 Useful Lite (years) 10 10 IL MARR s 12%, which alternative should be selected? Note: $5,600 is a sunk cost, not relevant for comparison. 24,000 10