IE 3301
IE 2311 Practice Exam 11. Calculate P for the following
diagram.
300
250
200
150
P i = 10%
2. A high tech company in the US can have one of the popular
items made offshore at half the price of making them in the US.
However, about 80% of the items made offshore will be returned
within the warranty period of 1 year for refurbishing. The
following additional data is available.
Cost of making an item in the US=$250
Cost of refurbishing in the US=$50
Number Sold / Year
= 500,000
Compute the cost savings that the company makes per year by
making the item offshore.
3. You have taken out a 5-year, $17,000 car loan with Caddy
Shark Loan Corp. The nominal interest rate is 12% per year,
compounded semiannually. If you wait until the end of the 5-years
to pay back the entire loan (plus interest), how much will you have
to pay at that time?
4. You want to invest your $5,000 starting bonus for at least
five years. Which one of the following financing options would give
you the greatest return on your investment over five years?
A. 7.98% per year compounded semiannually.
B. 7.90% per year compounded quarterly.
C. 7.80% per year compounded daily.
D. 7.82% per year compounded weekly. (52 weeks per year).E.
7.86% per year compounded monthly.
5. A cabinet manufacturer wants to calculate the present worth
of the costs associated with a machine it plans to purchase today
and to operate for five years. The following costs have been
identified.
Initial (Purchase) Cost$500,000
Annual Operating Cost $8,000
Maintenance and Repair Costs$700 in Year 1
$1000 in Year 2
$1300 in Year 3
And so on
Calculate the present worth of the costs, assuming an interest
rate of 4% per year, compounded annually.
6. Given the following graph, determine which production level
would yield the largest loss.
(a) 3000 units(b) 6000 units(c) 1000 units
(d) 4500 units(e) None of these production levels will yield a
loss7. One hundred compressors of 200 H.P. rating are being
considered for purchase by the state highway department. The cost
of a 150 H.P. compressor bought five years ago was $2,200 per unit.
The consumer price index was 400 five years ago and is 520 today.
Find the cost of 100 compressors of 200 H.P. rating today.
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