# Homework. economic of transportion

Homework – I’m in class 420######420

1. Which of the following 1-year investments has the highest rate of return?

(a) $12,500 that yields $1,125 in interest,

(b) $56,000 that yields $6,160 in interest, or

(c) $95,000 that yields $7,600 in interest.

- Note that this question has different problems depending on if you are in TRSS 420 or TRSP 620. A few hints for this problem. A principle amount is not given. This means that it does not matter what the initial principle is. You may assume some value if it makes calculations easier. Also, some may find excel useful though not necessary.
- • [TRSP 620]A student has been offered a 4 year loan at a simple interest rate of 7% per year. Another bank has offered the student a loan with compound yearly interest. What is the maximum interest rate of the compound interest loan for the student to accept their offer? Assume no payments will be made until the end of the 4th year.
- • [TRSS 420]A student has been offered a 4 year loan at a compound interest rate of 7% per year. Another bank has offered the student a loan with simple interest.
- What is the maximum interest rate of the simple interest loan for the student to accept their offer? Assume no payments will be made until the end of the 4th year.
- A company borrowed money at 5% interest per year (compound interest) to purchase new equipment. If the company got the loan 3 years ago and paid it off with a single payment of $28,941, what was the principal amount, P , of the loan?
- Discuss Governor Hogan’s decision to not fund the Red Line. What factors went into his decision? Do you agree with the decision?
- http://www.baltimoresun.com/news/opinion/editorial…