A water resources engineer is trying to run a cost-benefit analysis for a project. They need to first decide on the planning period (the benefits should be calculated over N years, and N should be determined). If N is too large, then the future benefits in those years (e.g. 70 years from now) will have a very low present value. Therefore, the engineer would like to cut off the planning period after a point when the present equivalent of benefits becomes less than 6.25% of that future benefit. If the interest rate is 8%, use the rule of 72 to determine the duration of the planning period (N).

Answer:

N = 36 years

Explanation:

Solution:

According to the 72 rule, present sum doubles in value, if the product of interest rate in percent and number of compounding period is 72.

So, We can say for every 9 years at 8 percent = 72 = present sum will be doubled.

Similarly, it will be doubled at 18 years., then 27 years, then 36 years and so on.

SO,

We need to find the P/F ratio, for the end of 0 years first.

Formula = (P/F, i, n) = [tex](1 + i)^{-n}[/tex]

here,

i = 8%

n = 0 years.

P/F =  [tex](1 + 0.08)^{-0}[/tex] (Anything power zero = 1)

So, similarly, calculate this P/F ratio for every 9 years till present equivalent of benefits becomes less than 6.25% of that future benefit.

find the P/F ratio, for the end of 9 years:

Formula = (P/F, i, n) = [tex](1 + i)^{-n}[/tex]

here,

i = 8%

n = 9 years.

P/F =  [tex](1 + 0.08)^{-9}[/tex]

P/F =   0.50

Amount = 2x

find the P/F ratio, for the end of 18 years:

Formula = (P/F, i, n) = [tex](1 + i)^{-n}[/tex]

here,

i = 8%

n = 18 years.

P/F =  [tex](1 + 0.08)^{-18}[/tex]

P/F =   0.25

Amount = 4x

find the P/F ratio, for the end of 27 years:

Formula = (P/F, i, n) = [tex](1 + i)^{-n}[/tex]

here,

i = 8%

n = 27 years.

P/F =  [tex](1 + 0.08)^{-27}[/tex]

P/F =   0.13

Amount = 8x

find the P/F ratio, for the end of 36 years:

Formula = (P/F, i, n) = [tex](1 + i)^{-n}[/tex]

here,

i = 8%

n = 36 years.

P/F =  [tex](1 + 0.08)^{-36}[/tex]

P/F =   0.06 = P/F ratio percentage = 6%

Amount = 16x

Hence, N = 36 years because it is the value nearest to 6.25% required

find the P/F ratio, for the end of 45 years:

Formula = (P/F, i, n) = [tex](1 + i)^{-n}[/tex]

here,

i = 8%

n = 45 years.

P/F =  [tex](1 + 0.08)^{-45}[/tex]

P/F =   0.03

Amount = 32x

A downside of social media is that:

Your daughter is currently 10 years old. You anticipate that she will be going to college in 8 years. You would to have $136,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 3% per year, how much money do you need to put into the account today to ensure that you will have $136,000 in 8 years

The dean of a school of business is forecasting total student enrollment for this year's summer session classes based on the following historical data: Year Enrollment Four years ago 2000 Three years ago 2200 Two years ago 2800 Last year 3000 What is this year's forecast using the least squares trend line for these data

Consider two neighboring island countries called Arcadia and Felicidad. They each have 4 million labor hours available per week that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor.

Jeans Corn
Country (Pairs per hour of labor) (Bushels per hour of labor)
Arcadia 8 16
Felicidad 5 20


Initially, suppose Arcadia uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce corn, while Felicidad uses 3 million hours of labor per week to produce jeans and 1 million hours per week to produce corn. Consequently, Arcadia produces 8 million pairs of jeans and 48 million bushels of corn, and Felicidad produces 15 million pairs of jeans and 20 million bushels of corn. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and corn it produces.


Arcadia's opportunity cost of producing 1 pair of jeans is____of corn, and Felicidad's opportunity cost of producing 1 pair of jeans is____of corn. Therefore,____has a comparative advantage in the production of jeans, and____has a comparative advantage in the production of corn.

Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces jeans will produce ___ million pairs per week, and the country that produces corn will produce ____ million bushels per week.

When the two countries did not specialize, the total production of jeans was 23 million pairs per week, and the total production of corn was 68 million bushels per week. Because of specialization, the total production of jeans has increased by____million pairs per week, and the total production of corn has increased by____million bushels per week.

Because the two countries produce more jeans and more corn under specialization, each country is able to gain from trade.
Calculate the gains from trade—that is, the amount by which each country has increased its consumption of each good relative to the first row of the table. In the following table, enter this difference in the boxes across the last row (marked “Increase in Consumption”).
Arcadia Felicidad

Jeans Corn Jeans Corn
(millions of pairs) (millions of bushels) (millions of pairs) (millions of bushels)

Without Trade
Production 8 48 15 20
Consumption 8 48 15 20

With Trade
Production
Trade action
Consumption

Gains from trade
Increase in consumption

As an investor, what is the risk involved when investing in companies on the stock
exchange?
a. Investors can lose their existing shares if the value of the stock does not
increase within 90 days of purchase
b. Once they purchase a share, investors cannot sell them at a higher price
The price of stocks can decrease; for example, when the company
receives bad press
d. Investors are only at risk if the purchase a share when the stock price has
fallen
C.

Jane James owns an appliance store. She normally receives $50,000 worth of appliances per month. She does not like to owe people money and always pays her bills on the day she receives the invoice. Someone told her that if she delayed payment, she could actually increase her profit because the money would be earning interest in her account. She went through her bills and found that she actually had an additional ten days, on average to pay her invoices. She also found that she was earning 5 percent interest on the money she had in her money market savings account. If she delayed payment by ten days, how much additional interest would she earn for the year