ISYE220-Engineering Economy-Spring 2019
5. For the diagram shown below, the respective values of n for the following equation Po = 100(P/A,10%,n)(P/F,10%,n) are: 1pt
a. 7 and 2
b. 7 and 1
c. 6 and 2
d. 6 and 1
6. A nominal interest is similar to a/an: (1 pt)
a. effective interest rate
b. simple interest rate
c. compound interest rate
d. inflated interest rate
7. An interest rate of 1% per month is the same as: 1pt
a. Nominal 3% per quarter compounded monthly
b. Nominal 12% per year compounded monthly
c. All of the above
8. For cash flows of $2,500 in month 15, $3,000 in month 16, and amounts increasing by $500 through month 25, the n value to use in the P/G factor is 10. a. True (1pt) b. False
9. In the derivation of the F/A factor, the F is located one period after the last A. a. True 1 pt b. False
10. For a uniform series of monthly cash flows that begins in year 5, the P/A factor will yield a P value in year 4. 1pt
a. True
b. False
11. In the Arithmetic gradient factors, which involve the symbols G and P, the P value is always located: (1pt)
a. One interest period ahead of the first A value
b. Two periods prior to the start of the G
c. Two interest periods prior to the first A value
d. One interest period after the first A value
12. You have been offered a credit card by a department store that charges interest at 1.8% per month, compounded monthly. What is the effective annual interest rate for this credit card? 1pt
a. 23.87%
b. 21.60%
c. 22.34%
d. 18.00%
