Solve all of the following 5 questions and show all the works in detail.

Question #1 Given the financial data for three mutually exclusive alternatives in the table below. Determine the best alternative using the annual cash flow analysis. X Y Z First cost $50,000 $30,000 $25,000 O &M Cost/ year 12,000 5,000 2,400 Benefit/year 18,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 6 Interest Rate 7%

Question #2 A pump is needed for 12 years at a remote location. The pump can be driven by an electric motor if a power line is extended to the site. Otherwise, a gasoline engine will be used. Use an annual cash flow analysis and 8% interest rate. How should the pump be powered? Electric Gasoline First Cost $8000 $2300 Annual Operating Cost 240 1000 Annual maintenance 150 500 Salvage value 600 300 Life, in years 12

6 Question #3 The manager in a canned food processing plant is trying to decide between two labeling machines. Machine L Machine V First Cost $18,000 $28,000 M and O Cost 1,800 700 Annual benefit 5,000 10,000 Salvage value 1,000 2,000 Life, in years 7 11 Assume an interest rate of 5.5%. Use annual cash flow analysis to determine which machine should be chosen.

Question #4 You are interested in leasing a new car for 39 months. The value of the car is $52,000 You must pay $7000 at signing, which does not include the first months lease payment. The monthly lease cost for the car is $675 for 39 months. At the end of the lease, you will need to pay a lease termination fee for $2500. The interest rate for this type of the car is 2.5% APR. Calculate the present worth of leasing the car.

Question #5 A student loan totals $40,000 at graduation. The interest rate is 6%, and there will be 72 payments beginning 1 month after graduation. What is the monthly payment? What is owed after the first 3 years of payments?

Question #6 An office building should last 60 years, but his owner will sell it at 20 years for 40% of its construction cost. For the first 20 years it can be leased as class A space, which is all this owner operates. When the building is sold, the lands cost will be recovered in full. Land S2.5M Building $4.0M Annual Operating and Maintenance $540,000 Annual Property taxes and insurance 4.5% (% of initial investment) If the owner wants a 10% rate of return, what is the required monthly leasing cost? Assuming that the building is vacant 5% of the time, what is the required monthly lease?