From an engine repower to a shipper's prepayment offer, six barge-line decisions are priced to the cent in these GB550 Unit 2 time value of money problems. Searches like "gb 550 unit 2 assignment example", "gb550 unit 2 sample" and "gb550 unit 2 example" land here.
What a finished GB550 Unit 2 time value of money problems looks like
Six problems across roughly five pages, each ending in a one-line reading of the result. A towboat repower costing 4.6 million dollars saves 560,000 a year in fuel for 15 years; at 8 percent those savings are worth 4,793,308, so the repower clears its cost by about 193,000. Sixteen covered hopper barges at 815,000 each are 80 percent financed over ten years at 7.2 percent, a monthly payment of 122,202.40 and 4.23 million of interest. A lender quoting 7.10 percent compounded monthly proves cheaper, at 7.336 percent effective, than one quoting 7.25 semiannually, at 7.381. A fertilizer contract starting at 3.2 million and rising 3 percent a year for seven years is worth 17.45 million today at 9 percent. The overhaul fund and the prepayment close the set.
How a GB550 Unit 2 example is structured
The set is arranged by cash flow shape rather than by difficulty. A level stream opens it, since the repower question is one annuity against one cost, and the barge loan follows because it is the same formula solved for the payment. The lender comparison sits next, converting both quotes to effective annual rates before any judgment. The escalating contract is priced with the growing annuity formula, with a short check that summing seven discounted payments gives the same figure. A sinking fund for a 2.9 million overhaul due in four years comes after it, then the prepayment offer, solved for its rate. Each problem keeps one layout: givens with periods and compounding named, the formula in symbols, numbers substituted, the answer, and one sentence tying the result to what the barge line should do.
Savings against a price
Fifteen years of fuel savings discounted at 8 percent, using a factor of 8.559479, reach 4.79 million, and the answer states the margin over the 4.6 million repower.
Payment and the first month
The barge loan's 122,202.40 payment is split for month one into 62,592.00 of interest and 59,610.40 of principal, confirming the payment before totals are reported.
Quotes turned into one rate
Both lenders' offers become effective annual rates, and the monthly quote wins by about four and a half hundredths of a point despite compounding twelve times.
A contract that grows
Payments rising 3 percent a year total 24.52 million in nominal terms but only 17.45 million in present value at a 9 percent discount rate.
Saving for the shipyard
Quarterly deposits of 166,123.37 at 4.6 percent build the 2.9 million overhaul fund in sixteen quarters, with 242,026 of it supplied by interest.
What prepayment really costs
Taking 8.75 million now instead of 2.1 million a year for five years means borrowing from the customer at 6.40 percent, a rate the paper sets beside the firm's own borrowing costs.
Where marks go in GB550 Unit 2
Period conversions decide most of the credit on these problems. A ten-year barge loan solved as ten annual payments instead of 120 monthly ones misses the payment by thousands, and the size of the miss tells a grader exactly what happened. Comparing lenders on quoted rates, without converting either to an effective annual figure, reaches the wrong answer in this set. Growing annuities priced as level ones misstate the contract, by an amount that depends on which payment was used. Rate problems solved by guessing, with no rearranged equation or cash flow timeline, leave nothing for partial credit. Answers with no reading of the result, a figure left without saying whether the repower is worth it or the prepayment is cheap money, stop short of the managerial question GB550 builds from its first units.
Get a GB550 Unit 2 example written to your instructions
Paste in the Unit 2 problems word for word, the rubric, and any rule on spreadsheets or financial calculators. Each one is laid out with periods and compounding named, solved in symbols first, and closed with a sentence on the decision behind it. No charge applies to the opening custom sample, typically returned in 24-48h.
GB550 Unit 2 questions, answered
Why use a growing annuity for the shipping contract?
Because the payments rise each year by a fixed percentage, and treating them as level would misstate the value. The growing annuity formula handles that in one step, provided the discount rate exceeds the growth rate. The sample checks the result by discounting all seven payments individually, which a grader can follow line by line, and notes that the two methods agree.
Is the prepayment offer a good deal for the barge line?
The problem answers a narrower question: what rate the offer implies. Accepting 8.75 million now instead of five payments of 2.1 million is equivalent to borrowing at about 6.40 percent. Whether that is attractive depends on what the firm pays elsewhere, which the sample compares in one sentence. A real decision would also weigh the customer's credit and the contract's terms.
Can I solve these with Excel functions?
In most sections, yes, and the sample notes the matching function for each problem, such as PMT for the barge loan and RATE for the prepayment. Graders still tend to want the setup visible, so the formula and inputs appear above each function. If your instructor requires work by hand or calculator keystrokes, the custom version follows that instruction instead.