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BUS402 Past Exams Compilation-all answers correct-GRADED A

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[1]Set A 1. a) Engineering Economy is the analysis and evaluation of the factors that will affect the economic success of engineering projects to the end that a recommendation can be made which will... insure the best use of capital. b) Inelastic demand occurs when a decrease in the selling price produces a less than proportionate increase in sales. c) An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. Specifically, the interest rate (I/m) is a percent of principal (I) paid at some rate (m). For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for deferring the use of funds and instead lending it to the borrower. Interest rates are normally expressed as a percentage of the principal for a period of one year d) Compound interest is the sum of the capital plus the total amount of interest accumulated in previous periods. Thus compound interest means interest on top of interest. A bank account, for example, may have its interest compounded every year: in this case, an account with P1000 initial principal and 20% interest per year would have a balance of P1200 at the end of the first year, P1440 at the end of the second year, and so on. e) Discount on a negotiable paper is the difference between the present worth( the amount received for the paper in cash) and the worth of the paper at some time in the future (the face value of the paper or principal). Discount is interest paid in advance. Example is that when you borrowed P5000 from a bank and agreed to pay the loan at the end of 9 months and the bank discounted the loan and gave you P4000 in cash. Present worth - the worth of money or commodity at present time. Money may worth higher or lower depending on the economic stability of nation. The amount of commodities or services changes due to the supply and demand. [Show More]

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