1. A manufacturing firm needs to borrow $450,000 from a local bank at an interest rate of 10% over six years. What is the required equal payment to retire the loan in six years?

2. Consider the following investments:

Period                                                  Project Cash Flows

    n                                   A                     B                     C                   D

    0                              $-4,500            $-3,700            $-6,000           $-4,100

    1                              $0                    $1,750              $3,250            $2,200

    2                              $0                    $2,200              $1,800            $2,200

    3                              $6,200             $2,700              $1,100            $2,200

Compute the equivalent annual worth of each project at i=11%, and determine the acceptability of each project.

3. Jackie is considering buying a 2014 Tesla Model S costing $69,900 and finds that the retaining values of the vehicle over the next six years are as follows:

Percent of the total value retained after 36 months: 45%

Percent of the total value retained after 72 months: 29%

If her interest rate is 7% compounded annually, what is the ownership cost of the vehicle over 3 years? Six years?

4. Jones Digital just purchased a soldering machine to be used in assembly of circuit boards. This machine costs $270,000. Because of the specialized function it performs, its useful life is expected to be six years. At the end of its useful life, its salvage value is estimated to be $61,000. What is the capital cost for this investment if the firm's interest rate is 15%?