ECOR 3800 Midterm: Exam-ECOR3800-2009February

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1(a) suppose you obtain a loan in the amount of ,000 for upgrading your computer workstation. Annual nominal interest rate = 12%. (i) what is the monthly payment if it is intended to cover interest and principal? (2. 5 marks) (ii) what is the balance of principal following the third monthly payment? (2. 5 marks) 1(b) an emission testing shop is interested in evaluating two equipment designs. Notes: you are expected to select the appropriate methodology to solve this problem. ,000 for year 1, an increase of /year for following years (i. e. , 22,500 for year 2, etc. ) Note: the second withdrawal is to be made at the beginning of year 18, etc. 100 120 120 120 120 120 120 (5 marks) (2)(b) an oil company issued bonds 2 years ago with a face value of ,000 each and bond interest rate is 20% per year payable quarterly. The bonds have a maturity date of 8 years from the date they were issued.