ECN801

Final Exam






LAST NAME: __________________________

FIRST NAME: __________________________

Student #: __________________________




Marks are awarded for correct answers only, however there are no penalties
for incorrect answers. Solutions have all made use of the factor tables when
possible EXCEPT for simple compounding/discounting. GOOD LUCK!







Factor Tables included: 5%, 12%, 15%, 20%, 25% and 30%








Linear Interpolation Formula:
For two points on (i,PW): (i1,PW1) = (w,x) and (i2,PW2) = (y,z), the formula for (i*,0)
is:
(i*,0) = (i*=y-(y-w)*(0-z)/(x-z), 0)

Quadratic Formula:
The solution to the quadratic equation aX2 + bX + c = 0 is X = [-b +/- (b2-4ac)1/2]/2a

Input interest rate (%) = 5%

5% Interest Factors for Discrete Compounding 5%

Single Payment Equal Payment Series Gradient Series

Compound Present Compound Sinking Present Capital Gradient Gradient
Amount W orth Amount Fund W orth Recovery Uniform Present
Factor Factor Factor Factor Factor Factor Series W orth
N (F/P,i,N) (P/F,i,N) (F/A,i,N) (A/F,i,N) (P/A,i,N) (A/P,i,N) (A/G,i,N) (P/G,i,N) N
1 1.0500 0.9524 1.0000 1.0000 0.9524 1.0500 0.0000 0.00000 1
2 1.1025 0.9070 2.0500 0.4878 1.8594 0.5378 0.4878 0.90703 2
3 1.1576 0.8638 3.1525 0.3172 2.7232 0.3672 0.9675 2.63470 3
4 1.2155 0.8227 4.3101 0.2320 3.5460 0.2820 1.4391 5.10281 4
5 1.2763 0.7835 5.5256 0.1810 4.3295 0.2310 1.9025 8.23692 5

6 1.3401 0.7462 6.8019 0.1470 5.0757 0.1970 2.3579 11.96799 6

7 1.4071 0.7107 8.1420 0.1228 5.7864 0.1728 2.8052 16.23208 7
8 1.4775 0.6768 9.5491 0.1047 6.4632 0.1547 3.2445 20.96996 8
9 1.5513 0.6446 11.0266 0.0907 7.1078 0.1407 3.6758 26.12683 9
10 1.6289 0.6139 12.5779 0.0795 7.7217 0.1295 4.0991 31.65205 10

11 1.7103 0.5847 14.2068 0.0704 8.3064 0.1204 4.5144 37.49884 11

12 1.7959 0.5568 15.9171 0.0628 8.8633 0.1128 4.9219 43.62405 12
13 1.8856 0.5303 17.7130 0.0565 9.3936 0.1065 5.3215 49.98791 13
14 1.9799 0.5051 19.5986 0.0510 9.8986 0.1010 5.7133 56.55379 14
15 2.0789 0.4810 21.5786 0.0463 10.3797 0.0963 6.0973 63.28803 15

16 2.1829 0.4581 23.6575 0.0423 10.8378 0.0923 6.4736 70.15970 16

17 2.2920 0.4363 25.8404 0.0387 11.2741 0.0887 6.8423 77.14045 17
18 2.4066 0.4155 28.1324 0.0355 11.6896 0.0855 7.2034 84.20430 18
19 2.5270 0.3957 30.5390 0.0327 12.0853 0.0827 7.5569 91.32751 19
20 2.6533 0.3769 33.0660 0.0302 12.4622 0.0802 7.9030 98.48841 20

21 2.7860 0.3589 35.7193 0.0280 12.8212 0.0780 8.2416 105.66726 21

22 2.9253 0.3418 38.5052 0.0260 13.1630 0.0760 8.5730 112.84611 22
23 3.0715 0.3256 41.4305 0.0241 13.4886 0.0741 8.8971 120.00868 23
24 3.2251 0.3101 44.5020 0.0225 13.7986 0.0725 9.2140 127.14024 24
25 3.3864 0.2953 47.7271 0.0210 14.0939 0.0710 9.5238 134.22751 25

26 3.5557 0.2812 51.1135 0.0196 14.3752 0.0696 9.8266 141.25852 26

27 3.7335 0.2678 54.6691 0.0183 14.6430 0.0683 10.1224 148.22258 27
28 3.9201 0.2551 58.4026 0.0171 14.8981 0.0671 10.4114 155.11011 28
29 4.1161 0.2429 62.3227 0.0160 15.1411 0.0660 10.6936 161.91261 29
30 4.3219 0.2314 66.4388 0.0151 15.3725 0.0651 10.9691 168.62255 30

31 4.5380 0.2204 70.7608 0.0141 15.5928 0.0641 11.2381 175.23334 31

32 4.7649 0.2099 75.2988 0.0133 15.8027 0.0633 11.5005 181.73919 32
33 5.0032 0.1999 80.0638 0.0125 16.0025 0.0625 11.7566 188.13511 33
34 5.2533 0.1904 85.0670 0.0118 16.1929 0.0618 12.0063 194.41682 34
35 5.5160 0.1813 90.3203 0.0111 16.3742 0.0611 12.2498 200.58069 35

40 7.0400 0.1420 120.7998 0.0083 17.1591 0.0583 13.3775 229.54518 40

45 8.9850 0.1113 159.7002 0.0063 17.7741 0.0563 14.3644 255.31454 45
50 11.4674 0.0872 209.3480 0.0048 18.2559 0.0548 15.2233 277.91478 50
55 14.6356 0.0683 272.7126 0.0037 18.6335 0.0537 15.9664 297.51040 55
60 18.6792 0.0535 353.5837 0.0028 18.9293 0.0528 16.6062 314.34316 60

65 23.8399 0.0419 456.798 0.0022 19.1611 0.0522 17.1541 328.69098 65

70 30.4264 0.0329 588.529 0.0017 19.3427 0.0517 17.6212 340.84090 70
75 38.8327 0.0258 756.654 0.0013 19.4850 0.0513 18.0176 351.07215 75
80 49.5614 0.0202 971.229 0.0010 19.5965 0.0510 18.3526 359.64605 80
85 63.2544 0.0158 1,245.087 0.0008 19.6838 0.0508 18.6346 366.80070 85

90 80.7304 0.0124 1,594.607 0.0006 19.7523 0.0506 18.8712 372.74879 90

95 103.0347 0.0097 2,040.694 0.0005 19.8059 0.0505 19.0689 377.67742 95
100 131.5013 0.0076 2,610.025 0.0004 19.8479 0.0504 19.2337 381.74922 100
Input interest rate (%) = 12%

12% Interest Factors for Discrete Compounding 12%

Single Payment Equal Payment Series Gradient Series

Compound Present Compound Sinking Present Capital Gradient Gradient
Amount W orth Amount Fund W orth Recovery Uniform Present
Factor Factor Factor Factor Factor Factor Series W orth
N (F/P,i,N) (P/F,i,N) (F/A,i,N) (A/F,i,N) (P/A,i,N) (A/P,i,N) (A/G,i,N) (P/G,i,N) N
1 1.1200 0.8929 1.0000 1.0000 0.8929 1.1200 0.0000 0.00000 1
2 1.2544 0.7972 2.1200 0.4717 1.6901 0.5917 0.4717 0.79719 2
3 1.4049 0.7118 3.3744 0.2963 2.4018 0.4163 0.9246 2.22075 3
4 1.5735 0.6355 4.7793 0.2092 3.0373 0.3292 1.3589 4.12731 4
5 1.7623 0.5674 6.3528 0.1574 3.6048 0.2774 1.7746 6.39702 5

6 1.9738 0.5066 8.1152 0.1232 4.1114 0.2432 2.1720 8.93017 6

7 2.2107 0.4523 10.0890 0.0991 4.5638 0.2191 2.5515 11.64427 7
8 2.4760 0.4039 12.2997 0.0813 4.9676 0.2013 2.9131 14.47145 8
9 2.7731 0.3606 14.7757 0.0677 5.3282 0.1877 3.2574 17.35633 9
10 3.1058 0.3220 17.5487 0.0570 5.6502 0.1770 3.5847 20.25409 10

11 3.4785 0.2875 20.6546 0.0484 5.9377 0.1684 3.8953 23.12885 11

12 3.8960 0.2567 24.1331 0.0414 6.1944 0.1614 4.1897 25.95228 12
13 4.3635 0.2292 28.0291 0.0357 6.4235 0.1557 4.4683 28.70237 13
14 4.8871 0.2046 32.3926 0.0309 6.6282 0.1509 4.7317 31.36242 14
15 5.4736 0.1827 37.2797 0.0268 6.8109 0.1468 4.9803 33.92017 15

16 6.1304 0.1631 42.7533 0.0234 6.9740 0.1434 5.2147 36.36700 16

17 6.8660 0.1456 48.8837 0.0205 7.1196 0.1405 5.4353 38.69731 17
18 7.6900 0.1300 55.7497 0.0179 7.2497 0.1379 5.6427 40.90798 18
19 8.6128 0.1161 63.4397 0.0158 7.3658 0.1358 5.8375 42.99790 19
20 9.6463 0.1037 72.0524 0.0139 7.4694 0.1339 6.0202 44.96757 20

21 10.8038 0.0926 81.6987 0.0122 7.5620 0.1322 6.1913 46.81876 21

22 12.1003 0.0826 92.5026 0.0108 7.6446 0.1308 6.3514 48.55425 22
23 13.5523 0.0738 104.6029 0.0096 7.7184 0.1296 6.5010 50.17759 23
24 15.1786 0.0659 118.1552 0.0085 7.7843 0.1285 6.6406 51.69288 24
25 17.0001 0.0588 133.3339 0.0075 7.8431 0.1275 6.7708 53.10464 25

26 19.0401 0.0525 150.3339 0.0067 7.8957 0.1267 6.8921 54.41766 26

27 21.3249 0.0469 169.3740 0.0059 7.9426 0.1259 7.0049 55.63689 27
28 23.8839 0.0419 190.6989 0.0052 7.9844 0.1252 7.1098 56.76736 28
29 26.7499 0.0374 214.5828 0.0047 8.0218 0.1247 7.2071 57.81409 29
30 29.9599 0.0334 241.3327 0.0041 8.0552 0.1241 7.2974 58.78205 30

31 33.5551 0.0298 271.2926 0.0037 8.0850 0.1237 7.3811 59.67610 31

32 37.5817 0.0266 304.8477 0.0033 8.1116 0.1233 7.4586 60.50097 32
33 42.0915 0.0238 342.4294 0.0029 8.1354 0.1229 7.5302 61.26122 33
34 47.1425 0.0212 384.5210 0.0026 8.1566 0.1226 7.5965 61.96123 34
35 52.7996 0.0189 431.6635 0.0023 8.1755 0.1223 7.6577 62.60517 35

40 93.0510 0.0107 767.0914 0.0013 8.2438 0.1213 7.8988 65.11587 40

45 163.9876 0.0061 1,358.2300 0.0007 8.2825 0.1207 8.0572 66.73421 45
50 289.0022 0.0035 2,400.0182 0.0004 8.3045 0.1204 8.1597 67.76241 50
55 509.3206 0.0020 4,236.0050 0.0002 8.3170 0.1202 8.2251 68.40821 55
60 897.5969 0.0011 7,471.6411 0.0001 8.3240 0.1201 8.2664 68.81003 60

65 1,581.8725 0.0006 13,173.937 0.0001 8.3281 0.1201 8.2922 69.05812 65

70 2,787.7998 0.0004 23,223.332 0.0000 8.3303 0.1200 8.3082 69.21029 70
75 4,913.0558 0.0002 40,933.799 0.0000 8.3316 0.1200 8.3181 69.30310 75
80 8,658.4831 0.0001 72,145.693 0.0000 8.3324 0.1200 8.3241 69.35943 80
85 15,259.2057 0.0001 127,151.714 0.0000 8.3328 0.1200 8.3278 69.39347 85

90 26,891.9342 0.0000 224,091.119 0.0000 8.3330 0.1200 8.3300 69.41397 90

95 47,392.7766 0.0000 394,931.472 0.0000 8.3332 0.1200 8.3313 69.42627 95
100 83,522.2657 0.0000 696,010.548 0.0000 8.3332 0.1200 8.3321 69.43364 100

 Input interest rate (%) = 15%

15% Interest Factors for Discrete Compounding 15%

Single Payment Equal Payment Series Gradient Series

Compound Present Compound Sinking Present Capital Gradient Gradient
Amount W orth Amount Fund W orth Recovery Uniform Present
Factor Factor Factor Factor Factor Factor Series W orth
N (F/P,i,N) (P/F,i,N) (F/A,i,N) (A/F,i,N) (P/A,i,N) (A/P,i,N) (A/G,i,N) (P/G,i,N) N
1 1.1500 0.8696 1.0000 1.0000 0.8696 1.1500 0.0000 0.00000 1
2 1.3225 0.7561 2.1500 0.4651 1.6257 0.6151 0.4651 0.75614 2
3 1.5209 0.6575 3.4725 0.2880 2.2832 0.4380 0.9071 2.07118 3
4 1.7490 0.5718 4.9934 0.2003 2.8550 0.3503 1.3263 3.78644 4
5 2.0114 0.4972 6.7424 0.1483 3.3522 0.2983 1.7228 5.77514 5

6 2.3131 0.4323 8.7537 0.1142 3.7845 0.2642 2.0972 7.93678 6

7 2.6600 0.3759 11.0668 0.0904 4.1604 0.2404 2.4498 10.19240 7
8 3.0590 0.3269 13.7268 0.0729 4.4873 0.2229 2.7813 12.48072 8
9 3.5179 0.2843 16.7858 0.0596 4.7716 0.2096 3.0922 14.75481 9
10 4.0456 0.2472 20.3037 0.0493 5.0188 0.1993 3.3832 16.97948 10

11 4.6524 0.2149 24.3493 0.0411 5.2337 0.1911 3.6549 19.12891 11

12 5.3503 0.1869 29.0017 0.0345 5.4206 0.1845 3.9082 21.18489 12
13 6.1528 0.1625 34.3519 0.0291 5.5831 0.1791 4.1438 23.13522 13
14 7.0757 0.1413 40.5047 0.0247 5.7245 0.1747 4.3624 24.97250 14
15 8.1371 0.1229 47.5804 0.0210 5.8474 0.1710 4.5650 26.69302 15

16 9.3576 0.1069 55.7175 0.0179 5.9542 0.1679 4.7522 28.29599 16

17 10.7613 0.0929 65.0751 0.0154 6.0472 0.1654 4.9251 29.78280 17
18 12.3755 0.0808 75.8364 0.0132 6.1280 0.1632 5.0843 31.15649 18
19 14.2318 0.0703 88.2118 0.0113 6.1982 0.1613 5.2307 32.42127 19
20 16.3665 0.0611 102.4436 0.0098 6.2593 0.1598 5.3651 33.58217 20

21 18.8215 0.0531 118.8101 0.0084 6.3125 0.1584 5.4883 34.64479 21

22 21.6447 0.0462 137.6316 0.0073 6.3587 0.1573 5.6010 35.61500 22
23 24.8915 0.0402 159.2764 0.0063 6.3988 0.1563 5.7040 36.49884 23
24 28.6252 0.0349 184.1678 0.0054 6.4338 0.1554 5.7979 37.30232 24
25 32.9190 0.0304 212.7930 0.0047 6.4641 0.1547 5.8834 38.03139 25

26 37.8568 0.0264 245.7120 0.0041 6.4906 0.1541 5.9612 38.69177 26

27 43.5353 0.0230 283.5688 0.0035 6.5135 0.1535 6.0319 39.28899 27
28 50.0656 0.0200 327.1041 0.0031 6.5335 0.1531 6.0960 39.82828 28
29 57.5755 0.0174 377.1697 0.0027 6.5509 0.1527 6.1541 40.31460 29
30 66.2118 0.0151 434.7451 0.0023 6.5660 0.1523 6.2066 40.75259 30

31 76.1435 0.0131 500.9569 0.0020 6.5791 0.1520 6.2541 41.14658 31

32 87.5651 0.0114 577.1005 0.0017 6.5905 0.1517 6.2970 41.50060 32
33 100.6998 0.0099 664.6655 0.0015 6.6005 0.1515 6.3357 41.81838 33
34 115.8048 0.0086 765.3654 0.0013 6.6091 0.1513 6.3705 42.10334 34
35 133.1755 0.0075 881.1702 0.0011 6.6166 0.1511 6.4019 42.35864 35

40 267.8635 0.0037 1,779.0903 0.0006 6.6418 0.1506 6.5168 43.28299 40

45 538.7693 0.0019 3,585.1285 0.0003 6.6543 0.1503 6.5830 43.80513 45
50 1,083.6574 0.0009 7,217.7163 0.0001 6.6605 0.1501 6.6205 44.09583 50
55 2,179.6222 0.0005 14,524.1479 0.0001 6.6636 0.1501 6.6414 44.25583 55
60 4,383.9987 0.0002 29,219.9916 0.0000 6.6651 0.1500 6.6530 44.34307 60

65 8,817.7874 0.0001 58,778.583 0.0000 6.6659 0.1500 6.6593 44.39026 65

70 17,735.7200 0.0001 118,231.467 0.0000 6.6663 0.1500 6.6627 44.41563 70
75 35,672.8680 0.0000 237,812.453 0.0000 6.6665 0.1500 6.6646 44.42918 75
80 71,750.8794 0.0000 478,332.529 0.0000 6.6666 0.1500 6.6656 44.43639 80
85 144,316.6470 0.0000 962,104.313 0.0000 6.6666 0.1500 6.6661 44.44021 85

90 290,272.3252 0.0000 1,935,142.168 0.0000 6.6666 0.1500 6.6664 44.44222 90

95 583,841.3276 0.0000 3,892,268.851 0.0000 6.6667 0.1500 6.6665 44.44328 95
100 1,174,313.4507 0.0000 7,828,749.671 0.0000 6.6667 0.1500 6.6666 44.44384 100

Input interest rate (%) = 20%

20% Interest Factors for Discrete Compounding 20%

Single Payment Equal Payment Series Gradient Series

Compound Present Compound Sinking Present Capital Gradient Gradient
Amount W orth Amount Fund W orth Recovery Uniform Present
Factor Factor Factor Factor Factor Factor Series W orth
N (F/P,i,N) (P/F,i,N) (F/A,i,N) (A/F,i,N) (P/A,i,N) (A/P,i,N) (A/G,i,N) (P/G,i,N) N
1 1.2000 0.8333 1.0000 1.0000 0.8333 1.2000 0.0000 0.00000 1
2 1.4400 0.6944 2.2000 0.4545 1.5278 0.6545 0.4545 0.69444 2
3 1.7280 0.5787 3.6400 0.2747 2.1065 0.4747 0.8791 1.85185 3
4 2.0736 0.4823 5.3680 0.1863 2.5887 0.3863 1.2742 3.29861 4
5 2.4883 0.4019 7.4416 0.1344 2.9906 0.3344 1.6405 4.90612 5

6 2.9860 0.3349 9.9299 0.1007 3.3255 0.3007 1.9788 6.58061 6

7 3.5832 0.2791 12.9159 0.0774 3.6046 0.2774 2.2902 8.25510 7
8 4.2998 0.2326 16.4991 0.0606 3.8372 0.2606 2.5756 9.88308 8
9 5.1598 0.1938 20.7989 0.0481 4.0310 0.2481 2.8364 11.43353 9
10 6.1917 0.1615 25.9587 0.0385 4.1925 0.2385 3.0739 12.88708 10

11 7.4301 0.1346 32.1504 0.0311 4.3271 0.2311 3.2893 14.23296 11

12 8.9161 0.1122 39.5805 0.0253 4.4392 0.2253 3.4841 15.46668 12
13 10.6993 0.0935 48.4966 0.0206 4.5327 0.2206 3.6597 16.58825 13
14 12.8392 0.0779 59.1959 0.0169 4.6106 0.2169 3.8175 17.60078 14
15 15.4070 0.0649 72.0351 0.0139 4.6755 0.2139 3.9588 18.50945 15

16 18.4884 0.0541 87.4421 0.0114 4.7296 0.2114 4.0851 19.32077 16

17 22.1861 0.0451 105.9306 0.0094 4.7746 0.2094 4.1976 20.04194 17
18 26.6233 0.0376 128.1167 0.0078 4.8122 0.2078 4.2975 20.68048 18
19 31.9480 0.0313 154.7400 0.0065 4.8435 0.2065 4.3861 21.24390 19
20 38.3376 0.0261 186.6880 0.0054 4.8696 0.2054 4.4643 21.73949 20

21 46.0051 0.0217 225.0256 0.0044 4.8913 0.2044 4.5334 22.17423 21

22 55.2061 0.0181 271.0307 0.0037 4.9094 0.2037 4.5941 22.55462 22
23 66.2474 0.0151 326.2369 0.0031 4.9245 0.2031 4.6475 22.88671 23
24 79.4968 0.0126 392.4842 0.0025 4.9371 0.2025 4.6943 23.17603 24
25 95.3962 0.0105 471.9811 0.0021 4.9476 0.2021 4.7352 23.42761 25

26 114.4755 0.0087 567.3773 0.0018 4.9563 0.2018 4.7709 23.64600 26

27 137.3706 0.0073 681.8528 0.0015 4.9636 0.2015 4.8020 23.83527 27
28 164.8447 0.0061 819.2233 0.0012 4.9697 0.2012 4.8291 23.99906 28
29 197.8136 0.0051 984.0680 0.0010 4.9747 0.2010 4.8527 24.14061 29
30 237.3763 0.0042 1181.8816 0.0008 4.9789 0.2008 4.8731 24.26277 30

31 284.8516 0.0035 1419.2579 0.0007 4.9824 0.2007 4.8908 24.36809 31

32 341.8219 0.0029 1704.1095 0.0006 4.9854 0.2006 4.9061 24.45878 32
33 410.1863 0.0024 2045.9314 0.0005 4.9878 0.2005 4.9194 24.53680 33
34 492.2235 0.0020 2456.1176 0.0004 4.9898 0.2004 4.9308 24.60384 34
35 590.6682 0.0017 2948.3411 0.0003 4.9915 0.2003 4.9406 24.66140 35

40 1,469.7716 0.0007 7,343.8578 0.0001 4.9966 0.2001 4.9728 24.84691 40

45 3,657.2620 0.0003 18,281.3099 0.0001 4.9986 0.2001 4.9877 24.93164 45
50 9,100.4382 0.0001 45,497.1908 0.0000 4.9995 0.2000 4.9945 24.96978 50
55 22,644.8023 0.0000 113,219.0113 0.0000 4.9998 0.2000 4.9976 24.98675 55
60 56,347.5144 0.0000 281,732.5718 0.0000 4.9999 0.2000 4.9989 24.99423 60

65 140,210.6469 0.0000 701,048.235 0.0000 5.0000 0.2000 4.9995 24.99750 65

70 348,888.9569 0.0000 1,744,439.785 0.0000 5.0000 0.2000 4.9998 24.99893 70
75 868,147.3693 0.0000 4,340,731.847 0.0000 5.0000 0.2000 4.9999 24.99954 75
80 2,160,228.4620 0.0000 10,801,137.310 0.0000 5.0000 0.2000 5.0000 24.99980 80
85 5,375,339.6866 0.0000 26,876,693.433 0.0000 5.0000 0.2000 5.0000 24.99992 85

90 13,375,565.2489 0.0000 66,877,821.245 0.0000 5.0000 0.2000 5.0000 24.99996 90

95 33,282,686.5202 0.0000 166,413,427.601 0.0000 5.0000 0.2000 5.0000 24.99998 95
100 82,817,974.5220 0.0000 414,089,867.610 0.0000 5.0000 0.2000 5.0000 24.99999 100

 Input interest rate (%) = 25%

25% Interest Factors for Discrete Compounding 25%

Single Payment Equal Payment Series Gradient Series

Compound Present Compound Sinking Present Capital Gradient Gradient
Amount Worth Amount Fund Worth Recovery Uniform Present
Factor Factor Factor Factor Factor Factor Series Worth
N (F/P,i,N) (P/F,i,N) (F/A,i,N) (A/F,i,N) (P/A,i,N) (A/P,i,N) (A/G,i,N) (P/G,i,N) N
1 1.2500 0.8000 1.0000 1.0000 0.8000 1.2500 0.0000 0.00000 1
2 1.5625 0.6400 2.2500 0.4444 1.4400 0.6944 0.4444 0.64000 2
3 1.9531 0.5120 3.8125 0.2623 1.9520 0.5123 0.8525 1.66400 3
4 2.4414 0.4096 5.7656 0.1734 2.3616 0.4234 1.2249 2.89280 4
5 3.0518 0.3277 8.2070 0.1218 2.6893 0.3718 1.5631 4.20352 5

6 3.8147 0.2621 11.2588 0.0888 2.9514 0.3388 1.8683 5.51424 6

7 4.7684 0.2097 15.0735 0.0663 3.1611 0.3163 2.1424 6.77253 7
8 5.9605 0.1678 19.8419 0.0504 3.3289 0.3004 2.3872 7.94694 8
9 7.4506 0.1342 25.8023 0.0388 3.4631 0.2888 2.6048 9.02068 9
10 9.3132 0.1074 33.2529 0.0301 3.5705 0.2801 2.7971 9.98705 10

11 11.6415 0.0859 42.5661 0.0235 3.6564 0.2735 2.9663 10.84604 11

12 14.5519 0.0687 54.2077 0.0184 3.7251 0.2684 3.1145 11.60195 12
13 18.1899 0.0550 68.7596 0.0145 3.7801 0.2645 3.2437 12.26166 13
14 22.7374 0.0440 86.9495 0.0115 3.8241 0.2615 3.3559 12.83341 14
15 28.4217 0.0352 109.6868 0.0091 3.8593 0.2591 3.4530 13.32599 15

16 35.5271 0.0281 138.1085 0.0072 3.8874 0.2572 3.5366 13.74820 16

17 44.4089 0.0225 173.6357 0.0058 3.9099 0.2558 3.6084 14.10849 17
18 55.5112 0.0180 218.0446 0.0046 3.9279 0.2546 3.6698 14.41473 18
19 69.3889 0.0144 273.5558 0.0037 3.9424 0.2537 3.7222 14.67414 19
20 86.7362 0.0115 342.9447 0.0029 3.9539 0.2529 3.7667 14.89320 20

21 108.4202 0.0092 429.6809 0.0023 3.9631 0.2523 3.8045 15.07766 21

22 135.5253 0.0074 538.1011 0.0019 3.9705 0.2519 3.8365 15.23262 22
23 169.4066 0.0059 673.6264 0.0015 3.9764 0.2515 3.8634 15.36248 23
24 211.7582 0.0047 843.0329 0.0012 3.9811 0.2512 3.8861 15.47109 24
25 264.6978 0.0038 1054.7912 0.0009 3.9849 0.2509 3.9052 15.56176 25

26 330.8722 0.0030 1319.4890 0.0008 3.9879 0.2508 3.9212 15.63732 26

27 413.5903 0.0024 1650.3612 0.0006 3.9903 0.2506 3.9346 15.70019 27
28 516.9879 0.0019 2063.9515 0.0005 3.9923 0.2505 3.9457 15.75241 28
29 646.2349 0.0015 2580.9394 0.0004 3.9938 0.2504 3.9551 15.79574 29
30 807.7936 0.0012 3227.1743 0.0003 3.9950 0.2503 3.9628 15.83164 30

31 1,009.7420 0.0010 4034.9678 0.0002 3.9960 0.2502 3.9693 15.86135 31

32 1,262.1774 0.0008 5044.7098 0.0002 3.9968 0.2502 3.9746 15.88591 32
33 1,577.7218 0.0006 6306.8872 0.0002 3.9975 0.2502 3.9791 15.90619 33
34 1,972.1523 0.0005 7884.6091 0.0001 3.9980 0.2501 3.9828 15.92293 34
35 2,465.1903 0.0004 9856.7613 0.0001 3.9984 0.2501 3.9858 15.93672 35

40 7,523.1638 0.0001 30,088.6554 0.0000 3.9995 0.2500 3.9947 15.97661 40

45 22,958.8740 0.0000 91,831.4962 0.0000 3.9998 0.2500 3.9980 15.99146 45
50 70,064.9232 0.0000 280,255.6929 0.0000 3.9999 0.2500 3.9993 15.99692 50
55 213,821.1768 0.0000 855,280.7072 0.0000 4.0000 0.2500 3.9997 15.99890 55
60 652,530.4468 0.0000 2,610,117.7872 0.0000 4.0000 0.2500 3.9999 15.99961 60

65 1,991,364.8889 0.0000 7,965,455.556 0.0000 4.0000 0.2500 4.0000 15.99986 65

70 6,077,163.3573 0.0000 24,308,649.429 0.0000 4.0000 0.2500 4.0000 15.99995 70
75 18,546,030.7534 0.0000 74,184,119.014 0.0000 4.0000 0.2500 4.0000 15.99998 75
80 56,597,994.2427 0.0000 226,391,972.971 0.0000 4.0000 0.2500 4.0000 15.99999 80
85 172,723,371.1019 0.0000 690,893,480.408 0.0000 4.0000 0.2500 4.0000 16.00000 85

90 527,109,897.1615 0.0000 2,108,439,584.646 0.0000 4.0000 0.2500 4.0000 16.00000 90

95 1,608,611,746.7088 0.0000 6,434,446,982.835 0.0000 4.0000 0.2500 4.0000 16.00000 95
100 4,909,093,465.2977 0.0000 19,636,373,857.191 0.0000 4.0000 0.2500 4.0000 16.00000 100

Input interest rate (%) = 30%

30% Int erest F actors for Discret e Compounding 30%

Singl e Paym ent Equ al Paym ent Seri es Gradi ent Seri es
Compound Present Compound Sinking Present C apital Gradient Gradient
Amount W orth Amount Fund W orth Recovery Uniform Present
F actor F actor F actor F actor F actor F actor Series W orth
N (F/P,i,N) (P/F,i,N) (F/A ,i,N) (A/F,i,N) (P/A ,i,N) (A/P,i,N) (A/G,i,N) (P/G,i,N) N
1 1.3000 0.7692 1.0000 1.0000 0.7692 1.3000 0.0000 0.00000 1
2 1.6900 0.5917 2.3000 0.4348 1.3609 0.7348 0.4348 0.59172 2
3 2.1970 0.4552 3.9900 0.2506 1.8161 0.5506 0.8271 1.50205 3
4 2.8561 0.3501 6.1870 0.1616 2.1662 0.4616 1.1783 2.55243 4
5 3.7129 0.2693 9.0431 0.1106 2.4356 0.4106 1.4903 3.62975 5

6 4.8268 0.2072 12.7560 0.0784 2.6427 0.3784 1.7654 4.66563 6

7 6.2749 0.1594 17.5828 0.0569 2.8021 0.3569 2.0063 5.62183 7
8 8.1573 0.1226 23.8577 0.0419 2.9247 0.3419 2.2156 6.47995 8
9 10.6045 0.0943 32.0150 0.0312 3.0190 0.3312 2.3963 7.23435 9
10 13.7858 0.0725 42.6195 0.0235 3.0915 0.3235 2.5512 7.88719 10

11 17.9216 0.0558 56.4053 0.0177 3.1473 0.3177 2.6833 8.44518 11

12 23.2981 0.0429 74.3270 0.0135 3.1903 0.3135 2.7952 8.91732 12
13 30.2875 0.0330 97.6250 0.0102 3.2233 0.3102 2.8895 9.31352 13
14 39.3738 0.0254 127.9125 0.0078 3.2487 0.3078 2.9685 9.64369 14
15 51.1859 0.0195 167.2863 0.0060 3.2682 0.3060 3.0344 9.91721 15

16 66.5417 0.0150 218.4722 0.0046 3.2832 0.3046 3.0892 10.14263 16

17 86.5042 0.0116 285.0139 0.0035 3.2948 0.3035 3.1345 10.32759 17
18 112.4554 0.0089 371.5180 0.0027 3.3037 0.3027 3.1718 10.47876 18
19 146.1920 0.0068 483.9734 0.0021 3.3105 0.3021 3.2025 10.60189 19
20 190.0496 0.0053 630.1655 0.0016 3.3158 0.3016 3.2275 10.70186 20

21 247.0645 0.0040 820.2151 0.0012 3.3198 0.3012 3.2480 10.78281 21

22 321.1839 0.0031 1067.2796 0.0009 3.3230 0.3009 3.2646 10.84819 22
23 417.5391 0.0024 1388.4635 0.0007 3.3254 0.3007 3.2781 10.90088 23
24 542.8008 0.0018 1806.0026 0.0006 3.3272 0.3006 3.2890 10.94326 24
25 705.6410 0.0014 2348.8033 0.0004 3.3286 0.3004 3.2979 10.97727 25

26 917.3333 0.0011 3054.4443 0.0003 3.3297 0.3003 3.3050 11.00452 26

27 1,192.5333 0.0008 3971.7776 0.0003 3.3305 0.3003 3.3107 11.02632 27
28 1,550.2933 0.0006 5164.3109 0.0002 3.3312 0.3002 3.3153 11.04374 28
29 2,015.3813 0.0005 6714.6042 0.0001 3.3317 0.3001 3.3189 11.05763 29
30 2,619.9956 0.0004 8729.9855 0.0001 3.3321 0.3001 3.3219 11.06870 30

31 3,405.9943 0.0003 11349.9811 0.0001 3.3324 0.3001 3.3242 11.07751 31

32 4,427.7926 0.0002 14755.9755 0.0001 3.3326 0.3001 3.3261 11.08451 32
33 5,756.1304 0.0002 19183.7681 0.0001 3.3328 0.3001 3.3276 11.09007 33
34 7,482.9696 0.0001 24939.8985 0.0000 3.3329 0.3000 3.3288 11.09448 34
35 9,727.8604 0.0001 32422.8681 0.0000 3.3330 0.3000 3.3297 11.09798 35

40 36,118.8648 0.0000 120,392.8827 0.0000 3.3332 0.3000 3.3322 11.10711 40

45 134,106.8167 0.0000 447,019.3890 0.0000 3.3333 0.3000 3.3330 11.10991 45
50 497,929.2230 0.0000 1,659,760.7433 0.0000 3.3333 0.3000 3.3332 11.11075 50
55 1,848,776.3499 0.0000 6,162,584.4996 0.0000 3.3333 0.3000 3.3333 11.11101 55
60 6,864,377.1727 0.0000 22,881,253.9091 0.0000 3.3333 0.3000 3.3333 11.11108 60

65 25,486,951.9360 0.0000 84,956,503.120 0.0000 3.3333 0.3000 3.3333 11.11110 65

70 94,631,268.4517 0.0000 315,437,558.172 0.0000 3.3333 0.3000 3.3333 11.11111 70
75 351,359,275.5725 0.0000 1,171,197,581.908 0.0000 3.3333 0.3000 3.3333 11.11111 75
80 1,304,572,395.0513 0.0000 4,348,574,646.838 0.0000 3.3333 0.3000 3.3333 11.11111 80
85 4,843,785,982.7579 0.0000 16,145,953,272.526 0.0000 3.3333 0.3000 3.3333 11.11111 85

90 17,984,638,288.961 0.0000 59,948,794,293.204 0.0000 3.3333 0.3000 3.3333 11.11111 90

95 66,775,703,042.233 0.0000 222,585,676,804.110 0.0000 3.3333 0.3000 3.3333 11.11111 95
100 247,933,511,096.598 0.0000 826,445,036,985.328 0.0000 3.3333 0.3000 3.3333 11.11111 100

Ch.11
The following information applies to questions 1-4:

A 5 year-old tooling kit that was purchased new for $9000 has a current market
value of $4000 and expected O&M costs of $3000, increasing by $1200 per year.
Future market values are expected to decline by 25% annually (going forward). The
kit can be used for another 3 years at most. The optimal replacement kit costs $8000
and has O&M costs starting at $2500 per year, increasing by $2000 per year.
Salvage value for the new kit at the end of the first year is $4000 and falls by $1000
per year thereafter (until zero). The new model kit will be needed indefinitely.
Assume a unique minimum AECN(15%) for both kits (both the current and
replacement kit).
The MARR is 15%.

1) What is the AECC* ?

a) Less than 6925.70
b) 6925.70-6945.70
c) 6945.70-6965.70
d) 6965.70-6985.70
e) More than 6985.70







2) What is AEC2 for the Defender?

a) Less than 4902.05
b) 4902.05-4922.05
c) 4922.05-4942.05
d) 4942.05-4962.05
e) More than 4962.05












3) What is the savings in PEC (Present Equivalent Cost) of keeping the Defender for
the maximum number of years possible, relative to (as compared to) switching to
the new kit as soon as the Defender’s ESL is reached? (So find the PEC difference in
the two cases described)

a) Less than 1508
b) 1508-1548
c) 1548-1588
d) 1588-1628
e) More than 1628











4) What is the AEC (15%) of the indefinite replacement sequence: (j0,2), (j,2)∞ ?

a) Less than 6332
b) 6332-6372
c) 6372-6412
d) 6412-6452
e) More than 6452











Ch.5 & 6

5) The City of Atlanta is considering adding new buses for its current mass-
transit system that links from the Hartsfield International Airport to major city
destinations on a non-stop basis. The total capital investment package is worth
$8 million and is expected to last 10 years with a $750,000 salvage value. The
annual operating and maintenance costs for buses would be $2 million during
the first year, and will grow by 5% annually there-after. If the system is used for
600,000 trips per year, what would be the ‘fair’ (break-even, zero profit) price to
charge per trip? Assume that the City of Atlanta uses a 5% annual interest rate
for any city-sponsored projects.

a) $4.24-$5.24
b) $5.24-$6.24
c) $6.24-$7.24
d) $7.24-$8.24
e) $8.24-$9.24
6) A manufacturing firm is considering two types of gear coupling products. Due
to insufficient production capacity as well as anticipated market competition, the
firm wants to manufacture and market only one type of product at this time. The
required investments as well as the projected cash flows over a three-year
market life for each product are as follows:

n Product A Product B
0 -$120,000 -$120,000
1 $56,000 $46,000
2 $80,000 $103,000
3 X $52,000
IRR 30% 30%

The firm’s MARR is known to be 15% for this type of project.

Determine the required cash flow in year 3 (solve for X) in order for product A to
have a 30% Internal Rate of Return.

a) 62,000
b) 63,000
c) 64,000
d) 65,000
e) 66,000





7) Refer to the table in Q#6, but use X=62,200 instead of what you found for your
solution for Q#6 (so $62,200 is NOT the answer for Q#6). What is the IRR of the
incremental investment? (MARR=20%)

a) 45%
b) -40%
c) 70%
d) 20%
e) -5%
8) Consider the following investment cash flow. (Note that the n=0 and n=3 cash-
flows are negative)

Period (n) 0 1 2 3
Cash Flow -$190,000 $200,000 $110,000 - 50,000

What is the Present Worth of this investment at MARR=25%?

a) $14,600
b) $14,700
c) $14,800
d) $14,900
e) $15,000


9) Suppose that you are deciding between the following two projects to provide a
service that you will require indefinitely. What is the difference in the present
worth of the indefinite projects (between the choice of Project A and Project B:
PWB – PWA)? MARR = 30%

n Project A Project B
0 –200 –200
1 100 50
2 200 330
3 100

a) 4.44 – 6.66
b) 6.66 – 8.88
c) 8.88 – 10.10
d) 10.10 – 12.12
e) None of the above



10) Assume the following information:
n Land investment cost = $2,000,000
n Building investment cost = $1,000,000
n Annual upkeep cost = $200,000
n Property taxes and insurance = 5% of total initial investment annually
n Study period = 20 years
n Salvage value = Only land cost can be recovered in full
n 30 units with average 80% occupancy
n MARR = 25%
Find the required monthly rental charge in order to break even.

a) 3760 – 3780
b) 3780 – 3800
c) 3800 – 3820
d) 3820 – 3840
e) None of the above



Ch. 8

Use the following information to answer Q# 11-13 (no 50% rule here)

An asset with a fixed investment cost of $100,000 is depreciated over a 7-year
period. It is expected to have a $5,000 salvage value at the end of the 7 years.
(My answers approximate to the nearest dollar)

11) Using the straight-line method, what is B5?

a) 43,953
b) 46,266
c) 32,143
d) 72,757
e) 28,571

12) Using the double declining balance schedule, what is D5 ?

a) 7,437
b) 6,609
c) 5,312
d) 7,711
e) 18,593


13) Using the SOYD method, what is B4 (That’s a B, not a D)?

a) 25,357
b) 26,357
c) 27,357
d) 28,357
e) 29,357



14) Consider an equipment purchase of $140,000 today (n=0) that will be put into
operation in its 3rd year (n=3). The equipment is expected to be operational for 10
years. In just under 6 years from today (n=6), the equipment will require an
overhaul costing $40,000.
Using the CCA method (50% rule applies to both equipment and overhaul) and
assuming a CCAequipment rate of 30% and CCAoverhaul rate of 20 %, what is CCA9
(the CCA for period n=9)?
(Rounded up/down to the nearest dollar figure)

a) 9,808
b) 10,008
c) 10,208
d) 10,408
e) 10,608





Ch.14
The following information pertains to the remaining Questions (15-21).
Assume everything is given in CONSTANT dollars unless otherwise stated:
Hartsfield Company is considering purchasing a set of machine tools at a cost of
$60,000. The purchase is expected to generate revenues of $18,000, increasing by
10% each year directly due to increased efficiency. The purchase of the tools will
also lead to increased operating costs of $4,000 per year in each of the next three
years. Additional profits will be taxed at a rate of 40%. The asset falls into CCA Class
45 (rate = 20%) for tax purposes and the 50% rule applies. The project has a three-
year life. The constant-dollar market (re-sale) value of the machine tools is
expected to fall by 25% annually (for example: the resale value at n=1 would be
$45,000 in constant dollars). The machine tools will be purchased 75% on debt
(75% of the cost will be borrowed). The debt will be paid off in equal annual
payments over the life of the project. The interest rate on the debt was negotiated at
12% annually.
The general inflation rate is 7% per year (and affects everything that it normally
affects).
Assume a MARR’ =5%.
(Remember to round up/down to whole dollar figures for EVERY entry in the
income statement and cash flow statement. Solutions are also rounded to the
nearest dollar. Note: .5 rounds up)
The figures in the following questions are all dollar values unless stated otherwise.

15. The disposal tax effect in constant dollars is in which range?

a) (1150) to (1170)
b) 1170 to 1190
c) 1190 to 1210
d) (1210) to (1230)
e) None of the above

16. The CCA3 of the project in actual dollars is

a) 2008
b) 10,800
c) 8640
d) 6000
e) None of the above



17. What is the balance (principal) outstanding on the debt after the second debt
payment is made, B2? This is an actual dollar value.

a) 16720 – 16740
b) 16740 – 16760
c) 16760 – 16780
d) 16780 – 16800
e) None of the above




18. The Equivalent NPW(MARR) of the project is approximately (within $20 of)
a) 3760
b) 3800
c) 3840
d) 3880
e) None of the above



19. The IRR’ of the project is within the range

a) 12-12.5%
b) 12.5-13%
c) 13-13.5%
d) 13.5-14%
e) None of the above




20. Suppose f=0%. The 3rd period cash flow is

a) None of the answers below
b) 26440-26460
c) 26460-26480
d) 26480-26500
e) 26500-26520





21. The inflation tax is equal to (within $50 of)

a) – 2366
b) – 2466
c) – 2566
d) – 2666
e) None of the above

 N=0 N=1 N=2 N=3
INCOME STATEMENT
Revenues
Expenses
O&M
Debt Interest
CCA ( %)
Taxable Net Income
Income Taxes ( %)
Net Income

CASH FLOW
STATEMENT
Operating Activity
Net Income
CCA
Investment Activity
Investment
Working Capital
Salvage
Disposal Tax Effect
Financing Activity
Borrowed Funds
Principal
Repayment

Net Cash Flow




 N=0 N=1 N=2 N=3
INCOME STATEMENT
Revenues
Expenses
O&M
Debt Interest
CCA ( %)
Taxable Net Income
Income Taxes ( %)
Net Income

CASH FLOW
STATEMENT
Operating Activity
Net Income
CCA
Investment Activity
Investment
Working Capital
Salvage
Disposal Tax Effect
Financing Activity
Borrowed Funds
Principal
Repayment

Net Cash Flow




 N=0 N=1 N=2 N=3
INCOME STATEMENT
Revenues
Expenses
O&M
Debt Interest
CCA ( %)
Taxable Net Income
Income Taxes ( %)
Net Income

CASH FLOW
STATEMENT
Operating Activity
Net Income
CCA
Investment Activity
Investment
Working Capital
Salvage
Disposal Tax Effect
Financing Activity
Borrowed Funds
Principal
Repayment

Net Cash Flow




 N=0 N=1 N=2 N=3
INCOME STATEMENT
Revenues
Expenses
O&M
Debt Interest
CCA ( %)
Taxable Net Income
Income Taxes ( %)
Net Income

CASH FLOW
STATEMENT
Operating Activity
Net Income
CCA
Investment Activity
Investment
Working Capital
Salvage
Disposal Tax Effect
Financing Activity
Borrowed Funds
Principal
Repayment

Net Cash Flow