Engineering Economic Analysis

294 OTHER ANALYSISTECHNIQUES

9-3 ComputeFfor the following diagram.

300

250

150

1

200

I

100

t

0-1-2-3-4-5

1

i=12%

8~nTG

~~FOO 7f i I

0-1-2-"'-8-9-10

~ i=12% F

P

0-1-2-"'-8-9-10

P i=12% F

System 1 System 2

F

9-7 The interest rate is 16% per year and there are 48 com-

pounding periods per year. The principal is $50,000.

What is the future worth in 5 years?

A 20-year-old student decided to set aside $100 on his

2pt birthday for investment. Each subsequent year

through his 55th birthday, he plans to increase the

sum for investment on a $100 arithmetic gradient.

He will not set aside additional money after his 55th

birthday. If the student can achieve a 12% rate of

return, what is the future worth of the investments on

his 65th birthday? (Answer: $1,160,700)

You have an opportunity to purchase a piece of

vacant land for $30,000 cash. If you buy the prop-

erty, you plan to hold it for 15 years and then sell it

at a profit. During this period, you would have to pay

annual property taxes of $600. You would have no

income from the property. Assuming that you would

want a 10% rate of return from the investment, at what

net price would you have to sell it 15 years hence?

(Answer: $144,373)

An individual's salary is now $32,000 per year and

he anticipates retiring in 30 years. If his salary is

increased by $600 each year and he deposits 10%

of his yearly salary into a fund that earns7% interest

compoundedannually,what is the future worthof the

amount accumulatedat the time of his retirement?

9-11 Stamp collecting has become an increasingly

popular-and expensive-hobby. One favorite

method is to save plate blocks (usually four stamps

with the printingplate number in the margin)of each

new stamp as it is issued by the post office.But with

the rising postage rates and increased numbers of

new stamps being issued, this collecting plan costs

more each year.

Stamps, however, may have been a good place

to invest money over the last 10 years, as the de-

mand for stamps previously issued has caused resale

prices to increase 18% each year. Suppose a collector

25

f r I

10

i t
0-1-2-3-4-5-6-7-8-9-10-11

1

i=10%

9-6 Calculate the present worth and the future worth of

a series of 10 annual cash flows with the first cash

flow equal to $15,000 and each successive cash flow

increasing by $1,200. The interest rate is 12%. The

total cash flow series is a combination of Systems 1

and 2.

.-------------

F

9.8

(Answer: F=$1199)

9.4 For the following diagram, compute F.

4x

1

3x

t

2x

t

x

.

0-1-2-3-4 9-9

i= 15%

1

F

9.5 For the following diagram, computeF.

30 30 30 30 30 30

9.10