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Please dont use Excel and do all the parts of the questions. Show your work!!! Problem 1 Greg borrowed $100,000 to purchase a house. He
Please dont use Excel and do all the parts of the questions. Show your work!!!
Problem 1 Greg borrowed $100,000 to purchase a house. He agreed to repay the loan with equal monthly payments over a 30 year period at a nominal annual rate of 6 percent. a. What would be his monthly payment? b. What is the effective annual interest rate on the loan? c. Consider a closing fees of $2,000 on the loan. If he chooses to finance the closing costs, then what would be his monthly payment? d. What is the effective annual interest rate on the loan if he chooses to finance the closing costs? Problem 2 Excavator Useful Life Initial Investment Annual Operating Cost Salvage Value A B C 4 yrs 5 yrs 6 yrs $15,500 $20,250 $30,750 $8,750 $5,850 $3,175 $2,500 $3,000 $3,250 A construction engineer has been asked to recommend an excavator for ac- quisition. Three alternatives have been identified, having the characteristics shown in the table above. A MARR of 12 percent is used. a. Find the best alternative using the annual cost method. b. Find the present worth of each of the acquisitions. Can you use the present worth values to compare the alternatives? Explain your Step by Step Solution
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