Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 49

Business and engineering seniors are comparing methods of financing their college education dur­ing their senior year. The business student has $30,000 in student loans that come due at gradu­ation. Interest is an effective 4% per year. The engineering senior owes $50,000, 50% from his parents with no interest due and 50% from a
credit union loan. This latter amount is also due at graduation with an effective rate of 7% per year.
a) What is the D-E mix for each student
b) If their grandparents pay the loans in full at graduation, what are the amounts on the checks they write for each graduate
c) When grandparents pay the full amount at graduation, what percent of the principal does the interest represent