ISE 311 Engineering Economic Analysis HW-5

1. A woman borrowed $2,000 and agreed to repay it at the end of 3 years together
with 10% simple interest per year. How much will she pay 3 years hence?

2. At an interest rate of 10% per year, $100,000 today is equivalent to how much in
a year from now?

3. A company invested $450,000 ten years ago in a new technology that is now
worth $1,000,000. What rate of interest did the company earn on a simple
interest basis?

4. A firm has borrowed $5,000,000 for 5 years at 10% per year compound interest
(compounded yearly). The firm will make no payments until the loan is due,
when it will pay off the interest and principal in one lump sum. What is the total
payment?

5. Suppose that $2,000 is deposited in an account that earns 6% interest. How

much is in the account
a. After 5 years?
b. After 20 years?

6. A savings account earns 8% interest. If $1,000 is invested, how many years is it

until each of the following amounts is on deposit?
a. $1,360
b. $4,316

7. We know that a certain piece of equipment will cost $150,000 in 5 years. How
much must be deposited today using 10% interest to pay for it?